Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

DENATIONALISED STEEL UNDERTAKINGS (SALE OF SHARES)

11.6 a.m.

Mr. John Hynd: I beg to move.
That this House is of the opinion that the circumstances, terms and conditions of sale of the securities of the denationalised steel concerns will impose a heavy burden on the steel industry, on the workers, and on consumers of steel.
Since the passing of the recent denationalisation Act, we and the country have been waiting to see on what kind of terms and in what kind of conditions the great nationalised steel industry, which was doing so well in the operation of our great steel production, would be sold out to private enterprise. We now find from the issue of the securities in the United Steel Companies enough to give us some indication of the burden that is being placed upon the industry, and that means upon the workers in the industry, and also upon the consumers of steel interms of prices, upon our export trade, and upon the country as a whole in terms of national economy and national security.
It is common ground, I think, between the parties and all sections of the community that the safety and the prosperity of this country depend primarily upon a healthy, well co-ordinated, efficient steel industry, upon low prices for steel products, and upon a contented body of steel workers. When we consider the situation that is already being created by the issue of the United Steel Companies stock, and when we assume that this kind of operation is likely to be extended over the whole industry as other concerns are disposed of, we can assess to some extent what the situation is likely to be. Remember, when we are dealing with the United Steel Companies we are dealing

with the largest of our steel-producing concerns in this country, a group which produced 13½ per cent. of the total production of the industry in 1952.
When those concerns were taken over by the Steel Corporation in 1951 the total nominal value of the assets was £15¼ million. For those assets the Steel Corporation paid £21¼ million; or when one takes account of a £176,000 loss by one of the subsidiaries, the Santon Mining Company, under private enterprise, the purchase price was something more like £21½ million. That has now been sold for £23 million approximately, with an apparent profit to the Steel Holding and Realisation Agency of £2 million. Against that, however, one has to set off that one of the subsidiaries, John Summers and Sons, Limited, had already been got for £4¾ million, which would be added, presumably, to the price paid for the rest of the concerns. Thus there was a possible loss of £2¾ million. Whether that calculation is correct, I am not quite sure. [Laughter.] The position, of course, cannot be completely assessed. I am merely mentioning some of the factors that have to be taken into account before anyone says there has been an obvious loss or an obvious profit in the sale of these concerns.
There are other factors also. I do not know whether this will invoke the same kind of hilarity on the part of hon. Members opposite, but amongst these factors is the increase in the assets that has taken place since nationalisation. There is the very big question of the extent to which the holding in the United Steel Companies which have been handed over to the Agency in part-purchase will earn the amounts of interest which are envisaged in the prospectus. When one tries to assess all these considerations, it is extremely difficult to say whether this concern has been sold at a loss or a profit. Some of the considerations are long-term.
I turn for a moment to the prospects of the national Agency obtaining any return whatever, or anything like the return which one would assume from the rates that are quoted, for the shares that it now holds. What is clear from the prospectus is that there has been a considerable inflation in the nominal capital of these concerns. The prospectus tells us that the United Steel Companies, the


nominal capital of which when purchased by the Steel Corporation was £15¼ million, are now issuing £5 million of cumulative preference shares at 4½ per cent., £4 million of redeemable preference shares at 5¾ per cent. and £14 million of ordinary shares at £1 each. In addition, there is a £10 million debenture issue at 4¾ per cent.
The important point to note about these figures is that this total of £23 million—or, taking the debentures into account, £33 million—is now loaded on to the industry as an amount which in future will have to earn dividends for private shareholders. That can only be done at the cost of withdrawing from the industry these amounts of interest, money which ought to be used in the industry for the purposes of the industry and which was so used under nationalisation, but which now will be withdrawn in order to pay dividends to the private stockholders.
In comparing the situation with what prevailed under nationalisation, one finds from the prospectus of the United Steel Companies confirmation of what was contained in the Annual Reports of the Steel Corporation: that hitherto, under nationalisation, practically the whole—certainly the greater part—of development and modernisation that has taken place in the last two or three years was met from the internal resources of theindustry—that is, from the earned surpluses, which are now to be paid out in dividends—or from loans within the industry, which were obtainable at 3 per cent.
That latter operation, when one takes into account the total figures of the steel industry, and as was stated in the Report of the Steel Corporation covering the first seven months of nationalisation, saved no less than £200,000 of interest in seven months. Under nationalisation, the total amount that was paid out from the industry's resources in the form of private dividends was the 3½ per cent. interest on steel stocks—a fixed rate, no less and no more. Now we find that the interest rate envisaged by the private company to be paid out to private investors will not be 3½ per cent., but will be 7½ or even 9 per cent.
I remember very well that ever since the nationalisation of these great industries began, one of the strongest protests

to be made by the organised workers in the industry was against the difficulty of getting improved wages because of the heavy burden of 3 per cent. interest on the nationalised industries, or, in the case of steel, 3½ per cent. that had to be paid out from the industry to private shareholders. I wonder whether those workers will appreciate that the industry will not now have to pay out 3 per cent., or, in the case of steel, 3½ per cent., but will, according to the basis of the United Steel Companies' prospectus, be paying something like 6 or 7½ per cent., or even more, in the case of the bulk of the ordinary shares.

Mr. Spencer Summers: In contrasting the 3½ per cent. with the much higher figure which he has quoted, will the hon. Member make it clear that, irrespective of the profits earned in the industry, 3½ per cent. must be paid, even if the industry is running at a loss, whereas that does not apply to the interest on the equity shares with which the hon. Member is making the contrast?

Mr. Hynd: Certainly. The whole point is that when there is a fixed rate of interest in the form of compensation at 3½ per cent., people know where they are; there is a stable situation. But under the new situation, the whole thing is now a matter of gambling on the Stock Exchange. [HON. MEMBERS: "Oh."] It is no good hon. Members opposite adopting that attitude. If they read the reports of the Stock Exchange operations when these shares came on the market for the first time, they would find that that is precisely what happened. Hon. Members need not try to laugh off what goes on on the Stock Exchange, because the whole country has been very much enlightened about it in reading the story of the Savoy Hotel operation. That is what happens in the financing of private concerns under Stock Exchange conditions.
It is true that even under nationalisation the United Steel Companies still paid 9 per cent. to the Corporation. In 1951, they paid £4·7 million surplus, and in 1952 £6·1million, over to the Corporation. But the important point is that all of that money, less the 3½ per cent. on the steel stock, remained in the industry. That is the vital difference which I want to emphasise between the new situation and the situation under the nationalised organisation.
For what purposes did that money re main in the industry? Why was it provided that any surpluses that were earned by these nationalised industries should not be handed over to the Exchequer? The reason was that it was recognised that any surpluses earned by an industry like steel or the railways ought to be ploughed back into the industry in one form or another. That could only be done in one of three ways.
There were no private shareholders who could claim a higher dividend because there were higher surpluses. If higher surpluses were made, it was because of better organisation within the industry or better output by the workers, or because the consumer was paying a little more than he ought to do in the form of prices. Therefore, if an exceptional surplus was made, it ought to go back either in the form of lower prices to the consumer, who, after all, had paid the money, in improved conditions for the workers, who had produced the steel which had earned the money, or in the development and modernisation of the industry, including research and the provision of modem machinery and better amenities for the workers. That is what happened under a nationalised concern, but now, under private enterprise, the 6, 7 or 7½ per cent. is regularly to be poured out and lost to the industry entirely. That is what the public and the workers in particular ought to know.
As I said earlier, under nationalisation the workers made applications for an increase in wages. When that happened, they were usually met by the nationalised concern with a balance sheet which included the interest at 3 per cent., or 3½ per cent. in the case of steel. They were told, "This is a fixed charge. We are very sorry but we cannot afford any increase, or a substantial increase, in wages in view of these and other commitments which we have."
I wonder whether the private employers will be equally frank, and say to the workers, when they ask for reasonable conditions, "We are very sorry but we want to pay 5, 6 or 7½ per cent. or more dividend and we cannot agree to any increase in wages. "I am prepared to make a prophecy that no board of directors will use such terms again.
That can be done under nationalisation because the workers understand the

situation. But under a system where the amount to be paid out in dividends is a matter not of national interest, not legitimate satisfaction in respect of the capital which has been bought over by the State, but is something to attract higher rates on the Stock Exchange for the shares of the company, that is an entirely different matter.
What becomes, under this situation, of the prospect of future development and expansion of the industry? I notice in the prospectus that, in addition to the figures I read out, there is provision for a further authorised amount of £6,903,000 in unclassified shares of £1 which have not been issued. I assume that that is to provide for a further burden of interest, a further burden of capital, to enable the total capital to be stepped up in the event of this pouring out of money from the industry leading to a situation in which there are not enough reserves to provide for necessary development or modernisation and that further capital has, therefore, to be sought to meet those requirements.
What of prices? With this increase in the capital of the company, this increase in the amount of money being poured out of the company, there is obviously likely to be a considerable increase in the price of steel products in the near future because the companies will now have to earn more money to pay these higher rates of dividends and may have to raise even further capital later if they find that the reserves for depreciation are not enough, and they will, therefore, have to earn still more profit.
That is bound to have an effect on prices and, therefore, on the cost of living in this country, because steel goes into practically every product that we have. That is bound to affect what is just as important and it may be even more important—the prospects for our exports. Under nationalisation—I do not think this will be challenged by hon. Members opposite—the prices of steel products in this country have been the lowest of those of any major steel-producing country in the world. [HON. MEMBERS: "Hear, hear."] I am glad that that is agreed. This is a position which we are now reversing. This is a position which existed under nationalisation and which is now being brought into jeopardy.
What are the prospects of the workers' wages? I have mentioned the fact that


the workers are the people who produce the steel and who, therefore, in my opinion are entitled to some consideration and a share in the surpluses of the industry when there are surpluses. It also happens that in the event of any recession in the industry, where there is no national interest incentive for the owners of the industry to keep it going, where there are cuts back, reductions in plant and staff, etc., it is the workers who suffer first.
One need only ask any workers in a steel district what the situation was in the 'twenties. I remember at the beginning of the last war, when the Sheffield steel industries were in full production and short of workers, there was a great deal of cynicism among the Sheffield workers. They said, "This will be precisely what happened after the First World War." Then there was full production in wartime, unemployment in peace-time, the cutting-back of plant and the numbers of workers, who are the first victims. They must be because they are the playthings of private enterprise, whose interests are not the national interest and the maintenance of full employment—I do not blame them for that—but the maintenance of the highest margin of profits in relation to expenditure on output.
One must also ask what is to happen to research, training, and other matters of that kind. I expect we shall be told, "Why should research not go on? There will still be reserves. Companies will make provision for research." There are certain provisions for research co-ordination activities in the industry, but it is not without significance that even the Government thought fit to provide, in the denationalisation Act, against the default of private industry in respect of research and other matters. Presumably the Minister was aware of the fact that in handing over a nationalised concern to private enterprise he was taking a grave risk with investments of that kind.
All these kinds of fears are created in my mind in studying the conditions under which United Steel Companies is being sold. When one looks at the prospects for the whole of the steel industry, one must expect that the conditions will be no better, probably even worse, because United Steel happens to be one of the best organised and most efficient of our steel concerns. Therefore, if rates of 7½ per cent., 4¾ per cent. and 5½ per

cent. have to be offered to attract stockholders to this concern, what will be the position when the worst concerns are being sold off?
To attract buyers, even higher rates of interest will have to be offered in the future for concerns which, because of their inefficiency, will carry an even greater risk for the investors and the workers who have to carry the burden of that commitment. Of course, it is provided in the Act that if some of the worst concerns cannot be sold they can be left in the hands of the State, the same philosophy that the party opposite is following in the matter of housing—the leaving of slum elements in the hands of the Government and the handing over of the profitable elements to private enterprise
An estimate that has been made of the total additional interest which will have to be carried by the industry when it is denationalised is more than £5 million. That is the additional interest. It is not the total loss to the industry because in the last year of the Corporation's operations the total profit was £64½ million. That was after an additional £10 million was allowed for depreciation over and above the depreciation ordinarily arranged by the companies themselves.

Mr. Summers: The hon. Gentleman keeps on saying that this interest will have to be paid in the future. That would have applied had it been on Government stock, irrespective of the profit, it would have to be paid. But the hon. Gentleman ought not to use that phrase when he knows that the rate of dividend that will be paid will be dependent on the earnings. It is the prospect, under private enterprise, of being able to earn sufficient to pay these dividends that makes the prospectus possible.

Mr. Hynd: No doubt, the hon. Member will be given an opportunity to develop his point. I have already dealt with that point; it is quite simple. First, the £10 million debentures will have to be paid, the cumulative preference stocks will have to be paid. The ordinary stocks may have to suffer a cut in interest but they may also receive an increase in interest in the light of the operations of the industry, the cutting down of plant and the increase in plant. All these factors will change, but the whole fate of the financing of the


industry will now depend on the operations of the Stock Exchange, the readiness of buyers to take over the shares, the capacity of the industry to attract new finance for new issues, for example.
Therefore, the whole prospect of the industry developing at all will be dependent upon this very fact to which the Member for Aylesbury (Mr. Summers) continues to draw attention—the uncertainty of the whole situation and the uncertainty of the financial basis on which the industry will now have to operate.
As I was pointing out, it is not this additional £5 million that will be the only drain on the industry now. The Corporation in 1952 earned a profit of £64· million and the whole of that sum was retained in the industry. If such surpluses are earned under private enterprise, the greater part will now leave the industry entirely.
During the period of nationalisation, whatever the hon. Member for Aylesbury may say about the prospects of a private industry and the various fluctuations of the financial situation that may arise through ordinary stocks changing in value, as the report of the Corporation shows, we not only had the lowest prices for steel products of all the primary steel-producing countries in the world, but we had a record of expansion and development. This is referred to in the last Report of the Corporation in these terms:
Production of steel is now running at a higher rate than ever before in the history of the industry. Supplies of finished steel are similarly at a record level and the demand for steel, except for plates and some special categories, is being met.
The same thing applies to pig iron, where an all-time record has been achieved.
In addition to that, the industry has provided in its first five-year plan for development and expansion to the extent of £350 million. During the last two years nearly half of that was authorised, and these schemes are now presumably in progress. I do not know whether they will be completed or not. All this five-year plan of £350 million, earnings of £64½ million ploughed back into the industry, record lower prices, record expansion and development both in finished steel and in pig-iron was accomplished without any external borrowing whatever.

It was all drawn from the resources of the industry itself, without absorbing new capital burdens to be carried by workers and consumers in the future.
Even the short story of the nationalised Iron and Steel Corporation disposes of the slogans that were so popular among the Conservative Party recently about the "failure of nationalisation," the "millions of public money poured down the drain," the "dead hand of bureaucracy" and so on. I am concerned as to whether or not this great development and the prospect of retaining the maximum amount of earnings of the industry within the industry itself is likely to go on in the future.
I do not think so, because it happens to be the case that what has repeatedly been pointed out is only too true, that the industry will depend far too much in the future upon the chances of the market. It will depend upon the nervousness of shareholders who will be looking all the time to the prospects of the market, who will be concerned immediately they think that there might be a slight recession of steel, and who will be considering the possibility of withdrawing their money and selling their shares, transferring that money to breweries, dog tracks or something of the kind.

Mr. Peter Roberts: The hon. Gentleman says that the future of the industry depends on the stock market, but does he not know that the future of the industry depends upon its capacity to sell steel, the price of the steel and the way the industry is run?

Mr. Hynd: But surely the hon. Member does not believe for a moment that the operations of the stock market will have no influence at all on the position.

Mr. Gerald Nabarro: Very little.

Mr. Hynd: I would not agree with the hon. Gentleman for a moment. If a private industry wants to raise capital for development, research or anything else, it can only go to the stock market, and whether it gets the money depends on the future amount of interest it is committed to.

Mr. Nabarro: And its efficiency.

Mr. Hynd: Those are the considerations in the minds of the stock market people all the time. They do not consider the national interest, and I do not think that anyone is naive enough to suggest it. The whole story of Stock Exchange operations suggests that it is a gamble concerned with trying to make the maximum profits irrespective of any national consideration. That is fundamental to the whole question. That is what the whole history of private enterprise in the steel industry teaches us.
The Minister himself admits so much because of the various provisions he made in the Act. There are provisions for checking all undesirable development; provision for the Government stepping in to secure the raw materials necessary for the industry if the industry fails to do it itself; and provision for the Minister to step in in extreme cases of strategic need where, in the interests of the nation and of its existence and survival, it is necessary for the Government to take over some part of the industry. All this is provided for by the Minister under the Act because the Government recognise, despite all that their hon. Friends on the other side of the House say, that with the industry under stock market control they can have no confidence whatever in it facing up to the supreme tests.
The Minister no doubt recalled the condition in which the industry found itself in 1939 when we faced a world war with a dilapidated industry, an industry which had been denounced and criticised very severely by all kinds of authorities which have been quoted many times before in this House. It is not only the fact that a private concern has no direct interest in or responsibility for national survival or national purposes, but it is unfit by its very nature to meet the requirements of, and to operate in, the national interests. A nationalised industry is a co-ordinated industry based on sound finances, with the opportunity of integrating the various complementary sections within the industry as a single unit in the national interest.
A private concern must by its very nature either compete with other private concerns or become a monopoly. In the case of the United Steel Companies, we find that it is now to be separated in such

a way from other concerns, which, geographically and technically are complementary to its activities, that other inter-related concerns will now be within other groups, which will compete with the United Steel Companies. It must either operate in competition with them or it must seek to create with them a monopoly.
I know that the Government, when they were sponsoring the Bill, tried to make a case that they were out to prevent monopoly and to prevent the big shareholders from controlling the industry. They said they were going to allow the small man to have a show. But what happened when the shares first came on the Stock Exchange? According to the "Financial Times," large numbers of small holdings of £200 units or less when offered for sale were immediately snapped-up by the big financiers. The small man was given a preference in the allocation of those shares by the Agency, but the small man in many cases merely bought them as a gamble, and, the first day the Stock Exchange opened, they were snapped-up by the big concerns. Therefore, monopoly becomes almost an inevitable development of private enterprise in steel.
What about the prospects of the efficiency of the existing plants, leaving alone for the moment future development and expansion? One has only to recall the experience of pre-war time and even of post-war days from 1945 to 1948. One has only to recall the fate of Jarrow at a time when Jarrow was in its greatest need. "The Times" report of 1945 has been quoted ad nauseam in this House. It talked of inflated prices from 1914 to 1918 followed by a period of semi-bankruptcy from 1920 to 1932; of expenditure of all kinds ruthlessly cut; of timidity and excessive conservatism; of heavy proportions of obsolete equipment; of
too many works which 'sprawl,' works which are a tangled riddle of gaps, corners, adjacent shops alternately empty and overcrowded, illogical separation, unbalanced and tortuous routes and methods in the handling of materials; too many chairmen, managing directors and works managers…
I see hon. Members opposite are smiling. They are amused, but the workers who have to carry on the industry do not find it very funny. The hon. Member for Heeley (Mr. P. Roberts) ought to be aware of that. If he is not, he ought to be made aware of it.

Mr. P. Roberts: It was not the words which I was laughing at; I was laughing at the hon. Gentleman.

Mr. Hynd: I have been speaking for longer than I expected, but it just happened that the hon. Member burst into laughter as I read the quotation. I do not think his attempt to wriggle out of that has been very successful.
I could quote many other authorities on the sad state of affairs under the system which hon. Members opposite try to justify on the ground that it is the proper method of running the industry All this is being done at a time when our industry is facing a new situation in which the difficulties, whatever they may have been in the past, must become incalculably greater. The sellers' market is disappearing. Supply may exceed demand in a very short time.
We find already that in the United States production has gone up between 1948 and 1952 from 39·46 million tons to 83·18 million tons. In the Schuman Plan countries, production has risen from 2883 million to 41·16 million tons. World production in 1952 was estimated to reach about 240 million tons. Meanwhile, United Kingdom production has risen between 1948 and 1952 from 1168 million to 16·42 million tons. That is a very small total in relation to the vast new complexes with which we are faced.

Mr. Nabarro: The hon. Gentleman has mentioned the increase in production of the countries bound together in this Schuman Plan. Will he tell us how much of that increase is attributed to the resuscitation and rebuilding of the bombed German plants which were almost out of action in 1949 and which are now almost in full production?

Mr. Hynd: It just happens that the German contribution to that vast increase was probably smaller, in proportion, than most of the others. I have not got the exact figures, but I believe that German production increased between 1948 and 1952 from about 11 million tons to about 16 million. That has no considerable effect upon the picture, except that it shows that the progressive development of German steel production has been more rapid. It started from a lower level and it is likely to continue now to develop faster than the production of other countries in the Schuman Plan.
The point is that, whereas before the war our great competitors were America and Germany, now our great competitors are a very much greater America, in terms of steel, and an infinitely greater Schuman Community—not Germany—which in total, operating together as a co-ordinated unit, searching the world for raw materials in times of shortage will be an infinitely greater competitor than any we have had to meet in the past. According to the latest report of the High Authority for the Schuman Plan, the position has been reached where stagnation in development may become inevitable, especially in those countries operating under private enterprise, because of the disappearance of the sellers' market.
Therefore, for the Government to abandon the steel industry which was doing so well under nationalisation, when the whole of the earnings of the industry were ploughed back in one form or another—either in development, improvement in working conditions or lower prices—to abandon that to private enterprise, to the kind of financiers who have been operating the Savoy and other scandals only recently, the kind of financiers who controlled the fate of the steel industry at the time when "The Times" report and other authorities condemned the industry for its inefficiency and backwardness, is a betrayal of the interests of the country.
In present world circumstances, when our position militarily and economically is much more dangerous than possibly it has ever been before, we may anticipate that the action of the Government in handing over the industry to private enterprise may well prove a national calamity.

11.45 a.m.

Mr. D. L. Mort: I beg to second the Motion.
I sincerely congratulate my hon. Friend the Member for Attercliffe (Mr. J. Hynd) for his clear and worthy picture of the position in the industry. I intend to introduce into the debate reference to the men who produce steel so that hon. Members opposite will realise the heavy burden which the workers bear. Judging by the interjections from some hon. Gentlemen opposite, they do not appreciate conditions in the industry.
I am able to express the point of view of the workers because I worked in the industry for many years. I know the people who appreciate the efforts we on this side of the House made during recent debates to try to prevent a state of affairs which will bring for the workers a return to the old conditions which existed in the early days when the trade was run absolutely for private profit regardless of the condition of those who-produced the steel.
There is a fundamental difference between us on the purpose of industry. We on this side of the House, and the workers, believe that industry should be run for the benefit of the nation. I know that lip service will be paid to this theory, but do not ask a man what he believes—watch his actions. That is a safe criterion.
My hon. Friend has indicated what will happen throughout the trade. The workers see that higher dividends are paid and they know that the only way in which that can be done is for the workers to produce more or to continue to produce at the present rate under conditions which are not so good. There is a workshop philosophy about these matters. The worker looks upon the fellow who dabbles in the Stock Exchange in bulls and bears—

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): Or "Hynds"?

Mr. Mort: They look upon these fellows as people who are living upon the industry and taking the cream off the milk that is produced through the sweat and grime of the worker in front of the furnace. Does any one opposite deny that? We have our own economic theories. I do not want hon. Gentlemen opposite to believe that the steel worker is just a man who produces steel. He has other occupations. One of them, which he finds profitable in his spare time, is the study of industry and economics. He is not an ignorant man; do not make that mistake.
I tell the House that there was a feeling of despondency when the steel industry was denationalised. One theory—a very sound one—was often propagated in the steel works. I have heard it hundreds of times. It is this: If you know some-

body who is getting money and not earning it, then there is somebody who is earning and not getting it. The steel worker was happy when he worked for the nation. Now we have reversed the order. He has a very good description of the fellow who knocks about the Stock Exchange and plays and gambles with the things that he produces.
I remember on one occasion reading in a steel works canteen this little poem. It will reveal to hon. Members opposite what I am really after. It runs like this:
Dives daily feasted
And was gorgeously arrayed
Not at all because he liked it
But because it was good for trade.
That the people might have calico
He clothed himself in silk
And surfeited himself on cream
That they may have the milk.
He kept 500 servants
That the poor may not lack bread
And had his vessels made of gold
That they might have lead.
And even to show his sympathy
With the deserving poor
He did not work himself
That they may do the more.
I have mentioned these things because I want hon. Members opposite to listen to the voice of the man who really produces these goods of which we are talking today. There is only way of making national wealth. It is not made on the Stock Exchange. Wealth is made by the rolling mills in the steel works and nowhere else.
Let us remember Jarrow in 1936. I hope that in all our contributions to this debate today we shall not be backward in paying compliments to these people who are the salt of the earth. Although there is an element of despondency now prevailing in the industry, I can assure the House that the workers are looking forward with hope and confidence to the time when once again, with the turn of the political tide, we shall be sitting on the Benches opposite, and then we shall give the worker his just reward.

11.52 a.m.

Mr. Gerald Nabarro: I hope that the House will reject this Motion today. I must say that within my limited experience of Parliamentary affairs I have rarely listened to a more perverted and distorted account of conditions in the steel industry than that which flowed from the speech of the hon. Member for Attercliffe (Mr. J. Hynd).


He seems to have neglected to observe that Parliament has already decided, in accordance with the terms of the Iron and Steel Act, 1953, to return the iron and steel undertakings to private ownership. That is an accomplished fact, the Measure has reached the Statute Book, and most of the arguments of the hon. Member seemed to amount to a diatribe against denationalisation.
Not only has Parliament decided upon the principle of steel denationalisation, but it has set out very clearly the duties and powers of the Iron and Steel Holding and Realisation Agency, which, for short, we all now call I.S.H.R.A., and all of these powers are very carefully delineated in the Act of Parliament, Sections 18 to 26. Parliament having charged the Iron and Steel Holding and Realisation Agency with these responsibilities and the realisation of the assets that were formerly publicly-owned, I think it reasonable to inquire whether this is the propitious moment, when the Agency has just commenced its functions, to censure it and the method it has adopted, as the hon. Member for Attercliffe did during his speech.

Mr. J. Hynd: I am quite sure that there was no censure of the Agency involved in my remarks. I was drawing attention to the fact that in order to dispose of these concerns, the Agency has to agree on such conditions as will attract the money on the Stock Exchange.

Mr. Nabarro: There may be differences of opinion as to how the speech of the hon. Gentleman should be interpreted. I and my hon. Friends formed the impression, without any doubts in our minds, that the purpose of the hon. Gentleman's speech was, in part, to censure the operations of the Agency and to censure the Agency itself.

Mr. G. R. Strauss: Not a bit.

Mr. Nabarro: Is this Motion not an attempt to make the task of the Agency a great deal more difficult? I think it is.

Mr. G. R. Mitchison: Will the hon. Member bear in mind that the Agency cannot do anything whatever except in pursuance of the directions or with the consent of or in accordance with the terms of the general authority given

by the Treasury? The hon. Member had better direct his defence to the defence of the Chancellor of the Exchequer and not of the Agency.

Mr. Nabarro: If I may be allowed to continue, I shall be dealing with that precise point in a few moments. I want to deal with the Motion as a whole. I repeat: Is this Motion not an attempt to make the agency's task more difficult? In my view, it is. Is this Motion not an attempt to denigrate a body charged with a statutory responsibility? In my opinion it is. Is this Motion not a malevolent attempt to depress the value of the steel assets? In my opinion it is. Is this Motion not a mischievous manoeuvre? In my opinion it is. Is this Motion not an attempt to frustrate the will of Parliament? In my opinion it is.
We on this side of the House, want to return the steel industry to private enterprise.

Mr. Norman Smith: There is no enterprise about it.

Mr. Nabarro: No doubt the hon. Gentleman will be able to express his opinion later today. If he continues to interrupt me my speech will undoubtedly be of inordinate length. The hon. Member for Attercliffe referred to the "playthings of private enterprise." Those were the exact terms he used. In my view, prosperity in the steel industry, as in all other industries in this country, whether they be nationalised or privately owned, is indivisible. There is no question whatever of the steel industry, in the future, because it is being conducted privately, becoming a plaything of the stock market. Surely, the success of the industry depends for the most part on the enterprise and efficiency of the industry, which in its turn must be based upon reasonable co-operation between directors, management, skilled technicians and all the workers engaged in the industry.

Mr. Norman Smith: Jarrow.

Mr. Nabarro: The hon. Member keeps on shouting "Jarrow" at me. I can probably debate all the issues associated with Jarrow quite as well as he is able to do, but it is not relevant to the Motion before the House today. I am sure that Mr. Speaker would not wish me to go


back to the eighteenth century and give a long dissertation on the history of the iron and steel industry, including the 1930's. What we are concerned with is the position of the steel industry today, and its future prospects.
I believe that prosperity in this industry is indivisible and depends for the most part on genuine co-operation between directors, managements, skilled technicians and the workers employed throughout the industry. The position of the Conservative Party in this matter has been made abundantly clear for very marry years. I am going to repeat that statement for the benefit of hon. Gentlemen opposite. The position of the Conservative Party has been made abundantly clear for very many years.

Mr. Ede: That does not make it right.

Mr. Nabarro: The right hon. Gentleman the Member for South Shields (Mr. Ede) says that does not make it any better.

Mr. Ede: No; I said it did not make it right.

Mr. Nabarro: Perhaps it did not make it right, but the right hon. Gentleman and his hon. Friends are forever taunting the Conservative Party with the charge that they never honour their election pledges. I am going to talk about election pledges. In the 1950 General Election, this is what the Conservative Party wrote in their Election manifesto about the steel industry:
We shall repeal the Iron and Steel Act before it can come into force. Steel will remain under free enterprise but its policy on prices and development will be supervised as in recent years by a Board representative of Government, management, labour and consumers.

Mr. J. Hynd: In other words, they would not trust private enterprise.

Mr. Nabarro: In the evolution of the steel industry, we said it was desirable that there should be methods of co-ordinating the efforts of Government, management, workers, and consumers, which the manifesto showed were desirable in the national interests. As a result of the act of political turpitude perpetrated by the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) on 15th February, 1951, the Con-

servative Party wrote in its General Election manifesto for the following October:
The Iron and Steel Act will be repealed and the steel industry allowed to resume its achievements of the war and post-war years, mostly under private enterprise. To supervise prices and development, we shall revive, if necessary with added powers, the former Iron and Steel Board representing the State, management, labour and the consumers.
Precisely in accordance with those pledges given in two consecutive manifestos, the Iron and Steel Act reached the Statute Book on 14th May, 1953. We on this side of the House have therefore implemented precisely what we promised to do in two consecutive General Elections.
It might weary the House unduly—[HON. MEMBERS: "Hear, hear."] Well, the hon. and learned Member for Northampton (Mr. Paget) must not be impetuous. I have a large sheaf of notes here with which to regale him, and if he interrupts me a great deal, I shall be much longer. It might weary the House if I referred to the Parliamentary history of the controversy arising from the nationalisation and denationalisation of steel during the period since 1946. [Interruption.] On the contrary, many of the issues inherent in this Motion have arisen from these debates, and I content myself at this stage by saying that these debates have occupied in seven years no less than nine weeks of Parliamentary tine, excluding Private Members' time. All that time has been devoted solely to the controversy about the nationalisation and denationalisation of steel.
The Motion before the House rather unwisely contains these words:
…will impose a heavy burden on the steel industry, on the workers, and on consumers of steel.
I shall deal with consumers first. It is futile, of course, to engender a very high productive level of steel products in the United Kingdom unless the demand for that steel is ever present, and I hope in increasing volume, both at home and overseas.
It is explicit in the words of the Motion that consumers of steel, in some way or another—I am not quite sure how, and the hon. Gentleman who moved it made a somewhat pitiful attempt to explain it—will suffer as a result of the methods of re-selling the steel companies. In order


to enable me to prove otherwise, I propose to relate that to several comparative prices for steel and steel products, and then study the influence upon British steel prices of a greater or lesser rate of interest on steel stock after denationalisation. I am going to suggest that the effect of a greater or lesser rate of interest for steel stock would have a nugatory effect upon the prices of steel to the consumer.

Mr. J. Hynd: While the hon. Gentleman is making that point about the effect of increased rates of interest, would he also deal with the effect of the difficulties in the recapitalisation of the industry out of which we are taking £60 million a year?

Mr. Nabarro: Really, the hon. Gentleman must not run away from his Motion. The Motion says:
To call attention to the terms and conditions of the sale of shares"—
and, after further words, it finishes up—
will impose a heavy burden…on consumers of steel.
It says in effect that the terms and conditions of the sale will impose a heavy burden on consumers of steel. I propose to prove otherwise. Steel consumers—and I have been one for many years while engaged in the engineering industry—are concerned with three things. First of all. the free availability of supplies; secondly, the quality of the steel; and, thirdly, competitive prices. I am sure that I carry the hon. Gentleman with me in that summary of the interests of consumers.
First of all, let me deal with the free availability of steel, because that is a matter of paramount importance. It is an issue which attracted the attention of the right hon. Gentleman the Member for Vauxhall during his period of office as Minister of Supply for many years. I am glad to say that my right hon. Friend the Minister of Supply, on 5th May last, was able to make a most important announcement affecting the availability of steel supplies, and it is significant that he made that announcement in regard to the derationing of steel just nine days before the Iron and Steel Act reached the Statute Book. It is significant that these two events occurred within nine days of one another.

Mr. R. T. Paget: Why?

Mr. Nabarro: Because the free availability of steel is dependent upon a rising scale of production, and that production has gone up very satisfactorily in the last two years, largely in my view, as a result of the economic conditions created by the Conservative Government.

Mr. Paget: Does it not also illustrate quite clearly that, in the solution of a good many postwar difficulties, steel had become freely available before it was denationalised?

Mr. Nabarro: That is a rather specious argument. The hon. and learned Member should look along to his right and observe the posture and irritation of his right hon. Friend the Member for Vauxhall, who was the person responsible for rationing steel again shortly before he went out of office. Does the right hon. Gentleman wish to intervene?

Mr. Strauss: The hon. Gentleman was suggesting that by my appearance I was disagreeing with what my hon. and learned Friend said. I agreed, of course, with what he said.

Mr. Nabarro: That is very sad. because now they are both wrong, and the right hon. Gentleman ought to know better. He was responsible for introducing steel rationing in 1951. What my right hon. Friend said on 5th May, 1953. is apposite to the important issue of the free availability of steel, in which consumers are primarily interested:
The output of iron and steel in general has been steadily increasing, mainly as the result of the completion of a number of new blast furnaces during recent months.
There I interpose "Blast furnaces commenced by private enterprise long before the nationalisation of the industry." My right hon. Friend went on:
It is expected that home production of steel in 1953 will be about 17½ million ingot tons. That is about 1·3 million tons more than in 1952.
While there will continue to be some shortage of steelplate, steel supplies as a whole are now considered to be sufficient to meet overall home demands, as well as to provide somewhat larger quantities for export. The satisfactory increase in home production"—
I interposed again: "Mostly as a result of increased capital investment in new plants under private enterprise"—
should make it possible to reduce appreciably our imports of foreign steel, but if demand should rise further than is at present


expected there should not be much difficulty in purchasing additional steel from abroad.
So consumers might, in certain circumstances I suppose, be interested in buying foreign steel, a matter of very great importance, as I shall show in developing my argument further. My right hon. Friend went on:
In the light of this improved position, the Government have reviewed the present controls over distribution. Subject to the continuance of the voluntary scheme for the distribution of steelplate which I announced recently, we are satisfied that it is no longer necessary for iron and steel to be rationed.
The Government have accordingly decided that, with the exception of tinplate, statutory control of the distribution of iron and steel shall be brought to an end. I have made the necessary Orders which will take effect as from tomorrow."—OFFICIAL REPORT, 5th May, 1953; Vol. 515, c. 210.]
That extract from the Official Report shows that not only the increasing confidence in British industry engendered by Conservative policy but also the very large measure of private enterprise investment in the steel industry before nationalisation, had enabled a total level of production to be achieved which overcame the difficulties foreshadowed by the right hon. Gentleman opposite under the nationalisation policy, and enabled my right hon. Friend the Minister of Supply to duration steel. Does the hon. Gentleman who moved the Motion wish to intervene?

Mr. J. Hynd: I was waiting for the hon. Gentleman's observations about prices.

Mr. Nabarro: He must allow me to finish my observations about steel production. Not only was my right hon. Friend able to deration steel, but his confidence has been well borne out in practice in the last few months by the rising scale of production. It was stated only a few days ago that the output of steel during November, averaged to an annual rate, had reached the record level of 18,878,000 tons, compared with 18,460,000 tons in October, 1953, and 17,951,000 tons a matter of 12 months before.

Mr. Speaker: I have been listening with attention to the hon. Member to see how he relates what he is saying to the Motion before the House, which is really concerned with the terms and conditions of

the sale of securities of the denationalised industry. So far, the debate seems to have taken, in the hon. Member's hands, the general subject of the merits or demerits of nationalisation and private enterprise. We ought to pay a little narrower attention to the terms of the Motion.

Mr. Nabarro: I am grateful to you, Mr. Speaker, for your guidance. With no disrespect at all to you, may I go back for a few moments to what I was saying about the terms of the Motion, which refers to the interests of consumers, who are primarily concerned with the free availability of steel? That free avail ability of steel is dependent upon a rising scale of production. However, I have perhaps wearied the House with too many figures.

Mr. Speaker: The Motion says that the interests of consumers of steel may be adversely affected not by nationalisation or denationalisation but by the terms and conditions on which the shares are to be sold.

Mr. Boyd-Carpenter: You may recall, Mr. Speaker, that the hon. Member for Swansea, East (Mr. Mort), as I understood him, devoted the greater part of his speech to his view and to the views of workers in the industry upon the merits or demerits of nationalisation. In those circumstances I hope it might be possible for my hon. Friend and in due course myself, to make a few similar observations.

Mr. Speaker: Certainly, but not entirely to the exclusion of the Motion. The issue of nationalisation or denationalisation has already been decided by the House, and although references to it may be germane to the discussion and relevant, the main issue is the shares, and we must pay some attention to them.

Mr. Nabarro: I pass from the record level of production to a matter of equal importance to consumers of steel, and free availability of supplies and that is the matter of competitive prices. You will recall, Mr. Speaker, that it was very carefully argued by the hon. Gentleman who moved the Motion that the payment of an excessive rate of interest on stock would inflate prices and, through inflating prices, would impinge upon the interests of steel consumers. I am grateful to you


for your guidance, and I now propose to deal exhaustively with the question of competitive prices.

Mr. Mitchison: I would ask the hon. Member one question. Would he agree with me that if one means to talk an inconvenient Motion out it is a tactical error to show it so early in the day?

Mr. Nabarro: I am grateful to the hon. and learned Gentleman. I hasten to assure him that I have no intention of talking this Motion out. I am not trying to out-Cheetham Cheetham. The time now is only 20 minutes past 12, so the Motion has three hours and 40 minutes to run. I have no intention of talking for three hours and 40 minutes. Can I return to the question of competitive prices?
The hon. Gentleman who moved the Motion introduced a grain of truth into his statement when he observed that British steel prices were lower in most categories than those of foreign countries, produced in comparable grades and of comparable sizes of steel and steel products. The statement is worth examining, because it is relevant to the Motion that we should prove not only how competitive British steel is today, but what a trifling influence on those prices any variation of interest rates would have following the stock being launched on to the market by the Realisation Agency.
I have selected a number of steel products and I have compared the prices for the United Kingdom, with those for the United States, Germany, France and Belgium, and in every instance, with all these steel products, British prices are very considerably below our nearest competitors. There could be no question of any trifling variation in interest rates paid on stock causing any substantial inflation of those prices and thereby making British steel uncompetitive. When the hon. Gentleman has listened to these figures he will readily agree with that.
First, I refer to mild steel angles, and I have taken a common size—5 ins. x 5 ins. x ½ in. The United Kingdom price is £28 12s. a ton, the American price, in spite of their enormous production, is £38 a ton, the German price is £36 19s. 6d. a ton, the French price is £36 16s., and the Belgian price is £34 19s. 6d. There is a margin there

between Britain and the United States of America of no less than £9 8s. 0d. a ton. Could that margin be negatived by a trifling increase in interest rates? Of course it could not.
I will now take the second category—mild steel joists in 12 in. web, as regularly used in constructional engineering. The United Kingdom price of these joists is £28 13s. a ton, the United States price is £39 12s. a ton—an advantage there of no less than £10 19s. a ton, an enormous variation—the German price is £35 12s. a ton, the French price is £35 15s. 6d. a ton, and the Belgian price is £34 9s. 6d. a ton. Does the hon. Gentleman really believe in his naive approach to this problem that a 1 per cent. variation in interest rates could negative this enormously advantageous margin which the British steel industry is enjoying today as a result of its own efficiency?
The hon. Gentleman often referred to plates, because in certain construction, notably for shipbuilding, there is from time to time a shortage of plates. I have selected a well-known size of plate, not used exclusively in shipbuilding, but used in general engineering, of 20 ft. x 60ins. x ¼ in. The British price of such plate is £32 9s. a ton, the American price is. £41 4s. a ton—a difference of £8 15s.—the German price is £43 18s. a ton, the French price is £43 12s. 6d. a ton, and the Belgian price is £41 14s. 6d. a ton. Does the hon Gentleman really believe that all these most advantageous margins earned by the enterprise of the British steel industry could be offset by a trifling variation in the rate of interest paid on denationalised steel stock?

Mr G. R. Strauss: Will the hon. Gentleman tell us why therefore British steel makers have been complaining about the seriousness of foreign competition in their export markets?

Mr. Nabarro: As the right hon. Gentleman should know, British steel makers are particularly concerned with the production of steel to industrial establishments in this country, which, in turn, export many of their products. The direct steel export trade is relatively small compared with the total consumption on the home market.

Mr. J. Hynd: The hon. Gentleman has selected only certain articles of steel, but


he knows very well that similar margins do not exist in every case, as, otherwise, we would not, for example, have lost contracts for locomotives, and so on. I was not arguing that the trifling increase of 1 per cent. would be responsible for such wide variations in prices.

Mr. Nabarro: So far, I have only applied myself to angles, joists and plates. The hon. Gentleman says that I have selected certain types, but I am going through the whole gamut, and I am going to relate them to five different countries. I propose to prove exhaustively that this is a political manoeuvre by the hon. Gentleman to try to make certain persons engaged in the steel industry believe that a slighter higher rate of interest is going to cause hardship to consumers of steel, and is going to lead to unemployment.

Mr. G. R. Mitchison: I did not quite follow what the political manoeuvre was. Is it your speech?

Mr. Nabarro: The hon. and learned Gentleman has not been in his place throughout the whole of my observations. Had he been, he would have known to what I referred.
The fourth category to which I shall refer—since I am asked to do so by the hon. Gentleman—aresteel rails for which we have a very healthy export trade, the hon. Gentleman will be glad to know, with Soviet Russia. The following prices are for steel rails of 90 lbs. to the yard for specifications attracting orders of over 500 tons. Listen to these comparisons. The British price is £29 5s. a ton, the American price is £37 a ton, the German price is £38 1s. a ton, the French price is £38 7s. a ton and the Belgian price is £40 7s. 6d. a ton.
Does the hon. Gentleman really believe that a trifling variation in interest rates could bridge that enormous difference? In a moment, I shall apply a 1 per cent. variation to these figures and demonstrate exactly how ridiculous is the hon. Gentleman's argument. He referred to my having selected certain specifications of steel. I will now take steel bars of 1½ in. diameter, a specification which is widely employed in the engineering and constructional industries of this country. The United Kingdom price for such bars is £32 8s. 6d. a ton, the American price is £38 8s. a ton, the German price is

£37 6s. a ton, the French price is £36 13s. a ton, and the Belgian price is £35 6s. a ton, again a very advantageous margin for the British steel producer resting on his efficiency and his enterprise.

Mr. Paget: These are most interesting figures, but has the hon. Gentleman also the figure for wage increases which the employers could allow and still leave our prices competitive, because I should have thought that would be more useful news?

Mr. Nabarro: As you will know, Mr. Speaker, from your long association with British industry both inside and outside this House, the cost of production of steel does not rest on the materials alone. It also rests upon the cost of labour, and when I have finished my dissertation upon the cost of materials I shall pass on, equally exhaustively, to the issue of wages. I was challenged by the hon. Gentleman on specifications of steel, and I want to return to that issue.
I come now to reinforcing bars ⅝ in. in diameter. The British price is £31 18s. a ton, the United States price is £40 16s. a ton, the German price is £35 7s. 6d. a ton, the French price is £36 5s. a ton, and the Belgian price is £34 14s. a ton. Again, does the hon. Gentleman really believe that a 1 per cent. variation in interest rates could bridge that very wide and advantageous margin enjoyed today by British steel producers? Of course he could not.
I now come to strip steel, of which we have a very large production in this country. The hon. Member for Swansea, East (Mr. Mort) will have a special knowledge of strip. I hope he is cognisant of the very important competitive power of strip production by the British steel industry. I have selected one size at random, and I am sure that the hon. Member for Swansea, East will assure his hon. Friend that I have not selected one which is particularly advantageous to my argument. I have selected the specification 3 inches by3/16 inch.
The British price for that specification is £33 3s. 6d. a ton, as produced in the hon. Member's constituency, the American price is £43 8s. a ton—a difference of more than £10 a ton—the German price is £42 11s. a ton, the French price is £38 16s. a ton, and the Belgian price is £37 15s. 6d. a ton.
Will the hon. Gentleman go back to his constituency and tell those persons engaged on the floor of the workshops of the steel industry, as he should do as their local Member of Parliament, that British steel is more than £10 a ton cheaper than the equivalent American grade, and that out of that £10 not 1s. per ton would be taken up by an increase of 1 per cent. in interest rates on denationalised steel stock?

Mr. G. P. Stevens: I am interested in this very important Motion, even if hon. Members opposite are not supporting their hon. Friend adequately. There appears to be a very wide margin between the selling price of British and continental steels, but would it not be true to say that shipping charges, import duties and other charges none the less make the sale of the British products still exceedingly difficult?

Mr. Nabarro: I am grateful to my hon. Friend, but I should be led into a very wide argument if I went into all the international issues to which my hon. Friend refers. I hope that later he will contribute to the debate, because I am sure that his observations will be both illuminating and instructive. I am grateful to him for his intervention.
The next item is steel sheets. My hon. Friend the Member for Aylesbury (Mr. Summers) has, of course, for many years had special knowledge of an important plant that is concerned with the production of steel sheets. I am getting this into the Official Report so that the hon. Gentleman the Member for Attercliffe can tell the Sheffield steel workers exactly what I have said.

Mr. Arthur Palmer: Will it be in order to have it circulated?

Mr. Nabarro: It will be in the Official Report and, as I say, he will be able to tell them.
The size I have selected is one well known and widely employed in the engineering and other industries. It is a good example—steel sheet 6 ft. x 36 ins. x 20 Birmingham gauge. The British price is £40 16s.; American, £45 16s.; German, £51 6s. 6d.; French, £50 15s.; Belgian. £52 5s. 6d. In every case British steel sheets show a remarkably wide and advantageous margin.

[An Hon. Member: "Under nationalisation."] Not under nationalisation. The plants that produce this steel were built, as to 98 per cent., before the industry was nationalised and as to 2 per cent., during the short period of national ownership—and, thank goodness, it is a short period.

Mr. Douglas Jay: Will the hon. Gentleman tell us in just one instance how much of the British prices was represented by interest charges? Otherwise, these figures mean nothing at all. Perhaps he could give it in relation to tinplate.

Mr. Nabarro: The right hon. Gentleman should not be so impatient. It has been said that I have selected certain products which are well suited to my argument. I have gone right through a number of representative steel products and given prices, and if the right hon. Gentleman and hon. Members opposite will wait a moment, I will relate them to interest rates. I agree that it is important that the two should be associated, in view of the mention of consumers and terms and conditions within this Motion.
I take, as my last example, tinplate per box, 20 ins. x 14 ins. because I want to go over the whole field, and I use it only because of the interest of the hon. Member for Swansea, East who seconded this Motion, and who represents in this House a constituency which is largely concerned with the production of tin-plate. The United Kingdom price is £2 16s. 6d.; United States, £3, 3s. 9d.; German, £4 7s. 6d.; French, £4 2s. 6d. Again, British prices are considerably lower than those of competitive countries.
For the benefit of the right hon. Gentleman the Member for Battersea, North (Mr. Jay) who intervened a moment ago, I want to summarise all that I have said about comparative steel prices. I have worked this back with the slide-rule, and checked it with the British Iron and Steel Federation, and they are in a position to confirm the figures. Taking, as a basis, that the United Kingdom price is 100, these are the relative prices for Germany, France and Belgium. I use those three countries because reference has been made by hon. Gentlemen opposite to the Schuman countries. In the case of steel rails, with


the United Kingdom price at 100, the German price is 130; the French, 131; and the Belgian, 138. Steel plates—German, 135; French, 133; Belgian, 129.

Mr. Jay: On a point of order. The hon. Gentleman is surely merely repeating the comparative price of steel and is not relating his argument to interest charges at all. Is it in order that he should continue on that line?

Mr. Speaker: I think that the hon. Member is now putting the information which he has previously given to the House into the form of percentages. I do not know whether that enables him to advance an argument as to the effect of the sale of these shares upon the price to consumers, but I was waiting to see.

Mr. Nabarro: I am grateful to you, Sir, and to the right hon. Gentleman for intervening, because this argument is a very carefully constructed chain of evidence which commences with comparative steel prices and passes to a summary of all those prices, which I was then relating on a United Kingdom basic price of 100 and the conversion of all the relative prices in foreign countries to a basis that can be directly compared with the United Kingdom basic figure of 100. That is a common statistical method well known to the right hon. Gentleman after his long years of experience at the Treasury.
The third item relates to joists. Again, taking the United Kingdom price at 100, the German price is 124; French, 125; Belgian, 120. The relative figures for steel bars are German. 115; French, 113; Belgian, 109. Strip—German, 128; French, 117; Belgian, 114. My last item relates to steel sheets where the comparative figures are—German, 126; French, 126; and Belgian 128.
Does the hon. Member for Attercliffe after listening to figures of that kind, which most clearly and amply demonstrate that foreign steel costs from 25 per cent. to 33 per cent. more than British steel in every category, really believe that enormous variation in price could in any way be affected by a small variation, up or down, in the interest rate? Does the right hon. Gentleman really believe it could? Of course he does not.
I shall relate these steel prices with the interest rates, but shall, first of all, refer to the United Steel Companies—and it will be recalled that that is the only concern which has so far been sold. The Motion says:
…the terms and conditions for the sale of shares in the denationalised steel undertakings…
Only one of the steel undertakings has, however, been sold so far, and that is United Steel. I have therefore selected United Steel before nationalisation in 1947–48, which is a reasonable year to take, and have broken down its total expenditure for that year. Will the right hon. Gentleman take down these figures so that they are before him throughout the remainder of my speech?

Mr. G. R. Strauss: They will probably be inaccurate.

Mr. Nabarro: The right hon. Member intervened to say that they are probably inaccurate. They are derived from the official publications of United Steel. I am sure he would not wish to impute to United Steel any contravention of the Companies Act.

Mr. Strauss: Judging from everything the hon. Member has said so far, I think the deductions from the figures he will draw will not be accurate.

Mr. Nabarro: Perhaps I may be allowed to quote the figures and then we shall be able to decide whether they are accurate or inaccurate. The total expenditure of the United Steel group of companies in 1947–48, broken down in percentages, is as follows: out of 100 per cent., dividends, net, after payment of tax, accounted for 1·3 per cent.; that is all. I am sure the right hon. Gentleman will now recognize that I am being quite fair. Taxation was 4 per cent.; retained in the business, ploughed back for renewals, 3·8 per cent.; rents, rates, delivery charges, 5·9 per cent.; wages, salaries, holidays with pay, pensions—I shall refer back to this item later—25·8 per cent.; raw materials, 59·2 per cent. Here is the relation between the steel prices that I have mentioned and the question of the dividend yield. Dividends accounted, net, for only 1·3 per cent. of the total expenditure of the United Steel Companies.

Mr. Jay: Mr. Jay rose—

Mr. Nabarro: May I be allowed to finish this part of my argument? If the interest rate on the stock were raised by 1 per cent. from perhaps 8 per cent. to 9 per cent., or if it were diminished by 1 per cent. from 8 per cent. to 7 per cent., the variation that would thereby be incurred in the net sum of money distributed would be of the order of one-eighth—either one-eighth up or one-eighth down. But that one-eighth has to be applied to the 1·3 per cent. which is the net dividend distribution expressed in terms of percentage. Therefore, it is a variation of one-eighth of 1·3 per cent., and one-eighth of 1·3 per cent. is approximately ·16 per cent.—about one-sixth of 1 per cent. of the total expenditure.
Therefore, the variation in the selling price of steel that would derive from an increase or a decrease of 1 per cent. in the interest rate attached to the stock would be of the order of 1/600thpart of the selling price of the steel. If the selling price of the steel is averaged at £30 per ton, 1/600th part of that is 1s. per ton.
The hon. Gentleman's argument, as my hon. Friends will remember, was that an increase in the interest rate would reduce the competitive power of British steel. It would reduce it by Is. per ton. compared with the fact—to take just one example at random, steel plates—that the United Kingdom price is £32 9s. and the United States price is £41 4s. for the size 20 ft. x 60 in. x ¼p in. In that category we have a price advantage, compared with the Americans, of £8 15s. a ton, and if the interest rate on steel stock of the United Steel Companies were increased from 8 per cent. to 9 per cent., out of that £8 15s. per ton, 1s. per ton would be accounted for by that increase.
I hope that my hon. Friends at least, and even hon. Members opposite when they see this speech in cold print and analyse it, will agree with me that the influence of a 1 per cent. change in an interest rate attached to steel stock is nugatory and trifling in its incidence upon the finished price of steel.

Mr. Jay: Why does the hon. Gentleman take an increase of 1 per cent. in the interest rate? The yield, as he knows, on United Steel stock is something over 7 per cent. as against a rate of interest of 3½ per cent. on the Government stock.

Mr. Nabarro: Really, I do not want to go back over the whole argument again, but I will reply simply to the point. I took a 1 per cent. increase because it was relatively easy to explain in a speech, what the incidence of that would be. If the right hon. Gentleman wants to make it 2 per cent.—

Mr. Jay: No, 3 per cent.

Mr. Nabarro: All right. I will argue on a figure of 3 per cent. The effect of a 3 per cent. increase would be a 3s. price variation as compared with 1s. Is that not equally trifling? I have demonstrated, on most classes of steel that I have referred to, that the price advantage enjoyed as are sult of the enterprise and efficiency of the British steel industry is of the order of £8 15s. a ton. If we take a 3 per cent. increase in yield of British steel stock after denationalisation, it makes a difference of 3s. a ton as compared with a price advantage of £8 15s. a ton. The right hon. Gentleman is a statistician. Let him compare 3s. with 175s.—175s. being £8 15s. He finds that one is something of the order of 58⅓ times the other. Am I not correct therefore in saying that the variation in interest rates by 1 per cent. or 2 per cent, or even 3 per cent. could have only a nugatory effect on the price of finished steel?
I finally demolish this part of the Motion by saying that hon. Members opposite made a grave mistake when they referred to the terms and conditions placing a burden on consumers, for exactly the opposite is the case. Those consumers will benefit by a steady, measured increase year by year in total steel production which, far more than interest rates, will have a bearing on future prices and, far more than interest rates, will have the effect, by greater aggregate production, of bringing prices down.

Mr. J. Hynd: The hon. Gentleman has been trying to show the effects of increased interest rates over a whole range of products. Has he ever heard the story of the group of statisticians who were trying to work out why a colleague was drowned when they were walking over a stream the average depth of which was only 6 inches?

Mr. Nabarro: I do not think that is a pertinent analogy. I apologise to the hon. Gentleman and to the House for


hurling a mass of statistics at them, but these statistics are derived from unimpeachable sources. They are irrefutable, and when the hon. Gentleman goes away and considers their purport he will be in no reasonable doubt at all about the main principle and deduction that I have derived from these figures, which is that a variation in the interest rate of 1 per cent., 2 per cent., or even 3 per cent. in dividends paid upon denationalised steel stock cannot have any seriously detrimental effect on the consumer.
I have given way a great deal, and I am sorry if the speech is long, but this is a serious Motion—

Mr. Paget: It is not a serious speech.

Mr. Nabarro: The hon. and learned Gentleman has made one intervention so far, which, if I remember correctly, was something to do with the wages of steel workers. Steel workers are placed in quite a good position in the comparative schedule of wages earned in various industries in Britain, and I have extracted some figures from the Ministry of Labour Gazette for September, 1953. I am sorry that the hon. Member for Rotherham (Mr. Jack Jones) is not able to be here today, for he would have confirmed much that I am going to say, and much of it, in any event, has been confirmed in the national Press in various writings by Sir Lincoln Evans.
The steel industry today stands in the second position of all the industries of this country for average earnings. The coal industry is the highest, and in September, 1953, all workers averaged £11 14s. 1d. a week, adult male workers only, £12 6s. 1d. In the case of steel, which is second, all workers averaged £10 0s. 5d., adult males £10 12s. 3d. a week. In engineering all workers averaged £8 11s. 10d., adult males £9 16s. 4d. a week. In vehicles all workers averaged £9 4s. 3d. a week, adult males £10 4s. 8d. a week.

Mr. Norman Smith: On a point of order, Mr. Speaker. What has all this wages comparison to do with the terms of this Motion, namely,
circumstances, terms and conditions of sale of the securities of the denationalised steel concerns"?

Mr. Speaker: The main phrase is:
that the circumstances, terms and conditions of sale of the securities of the denationalised steel concerns will impose a heavy burden on the steel industry, on the workers, and on consumers of steel.
I am waiting patiently to catch the drift of the argument of the hon. Member to see if it is directed to that part of the Motion.

Mr. Nabarro: Thank you, Mr. Speaker. Again this is a chain of constructive and objective evidence, and it must be quoted in the correct order. I have quoted the comparative earnings of workers in the coal, steel and engineering industries and also in the case of vehicles, and those are some of the most important industries in the country. How can the terms and conditions of sale of these steel securities place an additional burden on the workers? I suggest only in two regards. Firstly, according to the argument of the hon. Gentleman, they might diminish earnings; secondly, according to the hon. Gentleman, they might diminish security of employment.
I submit to you, Mr. Speaker, that they can do neither. Are the favourable wages at present enjoyed by the steel industry likely to diminish so long as the economic climate of this country remains as heartening and as healthy as it has done in the last two years? I doubt it. Steel, because of its efficiency, because of the enterprise of the industry, and because it did not suffer in the short period that it was in public ownership, compares favourably with other nationalised industries. Therefore, the prospects of the steel workers are that their wages will be assured in the years to come, at a level at least comparable with other occupations in the wages schedule that I have read out. What is far more important, the general efficiency of the industry and its capacity to maintain the highly competitive prices that I have read out this morning is in itself an assurance that the wages of steel workers will remain at a relatively high level, and that their security of employment will also remain, as it has done during the last 15 years, in an exceptionally favourable position.

Mr. Summers: Has my hon. Friend observed that the mover of the Motion pointed out how the fact that the form in which the interest on the Government


stock had to be paid, irrespective of the prosperity of the industry, was used by the nationalised industry to refuse wage claims? And has my hon. Friend realised how relevant that is to the point he is making, namely, that higher yields and dividends will only arise in prosperous circumstances, which will be equally prosperous for the workers? So the change in the form of the interest is to the advantage of the workers, because in the old days, it could be used as an excuse for denying wage increases whereas now they will only be given when high wages and dividends are justified.

Mr. Nabarro: I am most grateful to my hon. Friend, whose considerable experience of the steel industry underlines the importance of his intervention. The fact of the matter is that prosperity in this industry is indivisible. If the earnings of its workers are to remain at the favourably high level which they enjoy today, and have done over the past few years, they must be associated with the general prosperity of the steel industry as a whole. The industry is raising its production year by year. I cannot believe that a trifling alteration in interest rates could have any more than a nugatory influence upon the level of steel wages, as was imputed by the hon. Gentleman.
The third matter to which the latter part of the Motion draws attention is the steel industry itself and a heavy burden being placed upon it. I have dealt with the irrelevance of the argument about competitive power being under mined by a minor variation in dividend yields. I have dealt with the irrelevance of the argument about favourable wage rates being undermined by a minor variation in interest rates. Let me now deal with the major consideration for all those who have to administer and manage the industry, that is, the prices at which they acquire their raw material.
You will observe, Sir, that the Motion refers to a heavy burden on the steel industry. Let me talk about the price of raw materials for a moment. The right hon. Gentleman who intervened a few moments ago will remember that I said that raw materials accounted in the year 1947 to 1948, in the instance of the United Steel group of companies, for no

less than 59·2 per cent. of the total expenditure of the group for the year. It is therefore irrefutable that the price which has to be paid for the essential raw materials of the steel industry is a major consideration in the Motion we are discussing.
I have not selected a wide range of materials, but I invite the hon. Gentleman the Member for Attercliffe (Mr. J. Hynd), if he is dissatisfied with those I have selected, to challenge me on other materials. I have selected blast furnace coke, No. 1 heavy melting scrap and basic pig iron. I hope the hon. Gentleman will not quarrel with any of those. He will recognise them as being important raw materials for the steel industry. I have compared the average price that the United Kingdom Steel manufacturers have to pay with the prices paid for comparable grades of material by steel manufacturers in foreign countries. In a moment I propose again to relate the influence of a variation in interest rates to the prices of these basic raw materials.

Mr. Wilfred Fienburgh: May I plead with the hon. Gentleman, if we have to endure the excessive tedium of his speech, that he should not shout at us? He is deafening us, and it must be having a bad effect on his voice. I would not like the hon. Gentleman to lose it within the next two hours.

Mr. Nabarro: The solicitude of the hon. Gentleman for my welfare is quite unnecessary I assure him. I said I would refer to blast furnace coke. The price paid by United Kingdom steel manufacturers is £4 17s. 3d. a ton. The price paid in the Lorraine area of France is £7 7s. a ton. The price paid in West Germany at Essen is £5 6s. 6d. so the British steel manufacturer is buying that essential raw commodity at a very favourable price.
In the instance of No. 1 heavy melting scrap, the British manufacturer is paying £6 2s. 2d. a ton, the United States manufacturer more than double, £12 12s. 6d. a ton, the French steel manufacturer £11 5s. a ton, the West German manufacturer £11 8s. 6d. a ton. Again the British steel manufacturer is in an extremely favourable position. In the case of basic pig iron, the British manufacturer is paying £14 6s. 6d. a ton, the


French manufacturer £19 5s. 6d. a ton, the United States manufacturer £20 10s. a ton and the West German manufacturer £18 18s. a ton.
Does the hon. Gentleman who moved this Motion really believe that a 1 per cent. variation in dividend yield, or perhaps a 2 per cent. variation, or even a 3 percent. variation, when properly related to the fact that approximately 60 per cent. of the expenditure of a steel company is in respect of its essential raw materials, could detrimentally affect the future prices that will have to be paid by steel manufacturers for their raw materials? Why, of course it could not. It would have a trifling influence.
Therefore, I invite the House to reject absolutely the second part of this Motion—I have yet to deal with the first part—the second part which states that the
…terms and conditions of sale of the securities…will impose a heavy burden on the steel industry, on the workers, and on consumers of steel.
It will have a nugatory effect on consumer interests, as reflected in the prices of steel. It will have a negligible effect on the fortunes of the steel industry in the future. It will, in my view, have no effect at all on the prospects of steel workers themselves and their future wages, which must be related to the future prosperity of the industry.
I turn to the first part of the Motion. The hon. Member for Attercliffe, its mover, had a good deal to say about the circumstances for the sale of the shares of this industry. I invite him to consider what are the circumstances in this instance and how they are dictated by a number of conditions generally inherent in the economic position of the nation at this moment. To start with, stock market conditions have a marked bearing on the circumstances. The economic climate of the moment has an even more important bearing. The profit record of the company to be sold has a vitally important bearing. The future prospects of the company to be sold must also be taken into account. The reserves of the company concerned have a marked bearing. Finally, the value of the fixed assets of the company must be taken into account.
All are matters that must be taken into account by the Iron and Steel Holding

and Realisation Agency in evolving the terms of the issue. They are considerations of very great complexity, and I think that my hon. Friend the Financial Secretary to the Treasury, replying on 19th November, 1953, had one or two pertinent things to say about the terms of the only issue which has so far been made, namely, the issue of the United Steel group of companies the prospectus for which, I see the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) is at this moment studying so assiduously.

Mr. Fienburgh: He must do something to keep interested.

Mr. Nabarro: I sympathise with the hon. Gentleman in his lack of interest. He is only interested in the bigoted and partisan arguments of his friends. He is not interested in listening to the viewpoint of his political opponents. This is what my hon. Friend said on 19th November, 1953:
As there have until this week been no dealings in ordinary shares in steel companies since they were nationalised, there is no such thing yet as normal interest rates in relation to such shares."—OFFICIAL REPORT, 19th November, 1953; Vol. 520, c. 1897.]
The prospective yield of 7⅓ per cent. does not, however, appear so very exceptionally high. The Actuaries' Investment Index of 24th November lists yields on industrial shares (capital goods) at figures between 5·07 per cent. and 7·54 per cent. The average yield of shipbuilding shares, for example, is given as 7·54 per cent.
I think my hon. Friend placed the terms of this issue in their correct perspective and in relation to their proper background. I have studied this matter since the United Steel resale, since the issue a few weeks ago, and I can find nothing onerous about the terms either in regard to the interests of the purchasers of stock, or in regard to the interests of the steel companies themselves.
Why, if hon. Gentlemen opposite wish to pursue this Motion and support it today, do they consider that the terms of this issue are favourable in the light of the requirements of the main Act? Why, in the light of financial probity—and there can be no doubt about the financial probity of the terms of the issue—and how do they think they offend in the light of current market conditions? I suggest that they give no offence.
Section 18 (1) of the main Act is very precise as to how the Agency shall be formed and how it shall operate. I think it is important in this context that the precise terms of that Section should again be referred to:
There shall be a body to be called the Iron and Steel Holding and Realisation Agency (hereafter in this Act referred to as 'the Agency'), and it shall be the duty of the Agency to secure, by the exercise of their powers under this Act, the return to private ownership of the undertakings which on the appointed day are owned by subsidiaries of the Agency.
There is the duty. What follows is even more important—
Provided that the Agency may discharge their duty under this section in such manner, and by such stages, and with such postponements of the sale of securities or other assets, as they may"—
as they may—
with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate, and pending the discharge of the said duty the Agency shall so exercise their powers as a holding company as to promote the efficient direction of their subsidiaries.
That Section alone gives the Agency almost complete autonomy. It gives it near independence of action. It leaves the decisions as to terms, as to conditions, as to circumstances in the hands of the Agency, subject only to one caveat. The caveat that is entered is that the Treasury shall have final approval; and, of course. it said, for they are dealing with publicly-owned assets, and the final decision in each case properly rests with the Treasury.
The point I want to make with force is that this Agency is acting precisely within its terms of reference, is acting precisely in accord with its statutory responsibilities, has not so far done and is, indeed, unlikely to do, anything at all which is of an offensive character either in regard to the statutory requirements or in regard to the interests of either the steel industry and its future prosperity, or the purchasers of the shares.
We are today facing a Motion of censure from hon. and right hon. Gentlemen opposite against the activities of this Agency. In everything I have said I trust that I have defended not only the Agency's actions but its integrity, and, which is probably of supreme importance.

the efficiency of the terms that—cannot the hon. Gentleman hear?

Mr. W. R. Williams: No.

Mr. Nabarro: The hon. Gentleman must come a little closer. There is another split here in the party opposite. The hon. Gentleman is complaining he cannot hear, while his hon. Friend the Member for Islington, North (Mr. Fienburgh) complains I am speaking too loudly.

Mr. Fienburgh: I warn the hon. Gentleman his voice is giving out.

Mr. Nabarro: And, which is most important, the efficiency of the arrangements—

Mr. Fienburgh: I must have been wrong about the voice.

Mr. Nabarro: —that it makes. I believe the Agency has behaved with scrupulous constitutional propriety in all these matters. I believe that nothing it has done is offensive in any way.
I wind up on this note. [HON. MEMBERS: "Ah."] It is suggested that the cost of promoting the United Steel sale has been excessive. I doubt whether that is so. The Agency, through its issuing houses, had to contend with no fewer than 52,000 applications for purchase. I think all would agree that 52,000 applications must have demonstrated that the stock offered was popular and was much sought after, in spite of the threats made by the right hon. Member for Vauxhall, because investors, large, medium and small, manifestly considered that it was a good investment.

Mr. Fienburgh: Why it is at a discount now?

Mr. Nabarro: I recognise that it is at a slight discount. There will be slight variations in the value of the stock, but it is only at a tiny discount.

Mr. Mitchison: Nugatory.

Mr. Nabarro: No, not nugatory, for any discount is, of course, a serious matter. I ask all in the House to compare the tiny amount of that discount with the trend of events after the issue of those infamous Daltons, the 2½ per cent. stock which declined in value from 100 to something less than 60 in a relatively short time. In other words, the


investor buying Daltons lost 40 per cent. of his investment almost overnight. The investor in this steel stock has so far lost, by the discount, only a tiny amount, and in view of the economic conditions today, the heartening influence of the progress of our balance of payments and the gold and dollar reserves, I have no doubt that that discount will shortly be turned into a premium.
There were 52,000 applicants for these shares. I am told, although there has been no official publication on this point, that the aggregate value of all the shares for which those 52,000 applications were made was of the order of £45 million. I notice that the right hon. Member for Vauxhall shrugs his shoulders. These facts are fairly well known although they have not been published. In other words, the issue was over-subscribed three times. That does not denote any lack of confidence on the part of the subscribing public. Its narrow and local issue is that there is confidence in the future of the denationalised steel undertakings. Its wider connotation is a reaffirmation of confidence in the prosperity of British industry and its competitive power with the foreigner.
It is said that the rate of interest provided for this one issue and the yield that will result from it is excessive. The hon. Member for Attercliffe, who moved the Motion, sought to bring in the wages of people in the industry and suggested that those people would be extremely dissatisfied at the interest rates offered and the dividends to be derived. It is instructive in this context to study what has happened since 1938 in relative increases in wages and in dividends.
Putting wages in 1938 at 100, wages in 1948 were 230 and in 1952 were 305. In other words, between 1938 and 1952 wages had more than trebled. In the case of dividends and interest combined, what was 100 in 1938 was in 1948 only 108 and in 1952, 133. In other words, dividends and interest had increased by only 33⅓ per cent. over 15 years, but wages and dividends have increased by more than three times.
Does any hon. Member really suggest that the owners of stocks and shares have been exceptionally well treated over the last 15 years? By comparison with wages,

the owners of stocks and shares have not been well treated. If the savings of the people are to be attracted, as, I think, would be agreed in all parts of the House, into productive enterprise and towards risk capital, it is, surely, important that the rates and dividend yields should properly reflect economic conditions that exist in present circumstances.
Much is said about the terms of the single issue for these denationalised steel companies and those published in the prospectus of the United Steel Companies. I ask hon. Members opposite, who, through this Motion of censure, are attacking the terms of that issue, to consider the inequalities inherent in the terms of the take-over, with which the right hon. Member for Vauxhall was so much concerned during his period of office. In those days, the stocks and shares in the steel companies were near sequestrated for a much too low figure. It may well be that the terms offered today are a trifle too good or a trifle too bad—they are not far out; but there should be some measure of equity in our consideration of these financial affairs and a direct comparison with what took place five years ago.
I quote from a most apposite article in the "Investor's Chronicle" dated 3rd February, 1951, dealing with the takeover terms:
To prove the inequity of the take-over terms it will be necessary to quote only one example, that of Dorman Long, one of the largest and most modern steel-making units in the country. For steel stock worth £13 million the national Corporation is to acquire net current assets of £14½ million with fixed assets carried in the books of £8 million (but worth at current prices very much more) thrown in. In its latest trading period Dorman Long returned a trading profit of £6¼million. The market price of the Ordinary Shares has for some years been based on a dividend of 8 per cent.; for 1949–50 that payment came from earnings of over 90 per cent.
That was the extent of the robbery perpetrated by the right hon. Member for Vauxhall and his friends. Today, we are not proposing any very generous terms in re-selling these steel companies. They are properly related to market conditions and to many economic and financial considerations that I have mentioned, and they are, in my view and, evidently, in the view of the purchasing public, a fair and reasonable proposition.

Mr. Frederick Mulley: We on this side have been much impressed by the arguments of hon. Members opposite that we acquired the industry at too low a price, but when we sought to insert in the denationalisation Bill a provision that no shares should be sold below their compensation price, the hon. Member and his friends voted against that proposition.

Mr. Nabarro: Before you returned to the Chair, Mr. Deputy-Speaker, it was ruled by Mr. Speaker that the debates on the main Act should not be brought into our discussions today. While the hon. Member's intervention raises a most interesting point, I do not think that I should exactly be in order within the terms of the Motion in pursuing it.
Manufacturers and consumers welcome the denationalisation of steel. The British public will welcome, as they have already demonstrated, the terms and conditions attached to the issue of steel stock in the private enterprise and denationalised companies. Free enterprise, subject to the supervision continued in the Act, is the will of the electorate and the decision of Parliament. Why, therefore, does this Motion seek to sabotage the legitimate machinery and the proper operations of the statutory power of the Iron and Steel Holding and Realisation Agency which has been created for the purpose of selling the industry back to private enterprise?
I hope that the Motion will be rejected. I repeat that its terms arc malevolent, mischievous and misconceived. The reception of the Motion on this side of the House is extremely hostile. I am glad that the Leader of the Opposition has returned to his place. I am sorry that he could not be here earlier. [An Hon. Member: "He was lucky."] He will have anxious memories of the controversy caused in his party after the 1950 Election as to whether or not steel nationalisation should proceed.

Mr. C. R. Attlee: Nonsense.

Mr. Nabarro: Nonsense? No controversy? So many rebels in the Labour Party at that time—

Mr. Norman Smith: On a point of order. What has this to do with the terms of the Motion? Whether there

was or was not controversy within the Labour Party some years ago as to the expediency or otherwise of proceeding with the nationalisation of steel surely has no relevance to the Motion, which as your predecessor in the Chair, Mr. Deputy-Speaker, pointed out was concerned not with the respective merits or demerits of nationalisation and denationalisation but solely with the terms of denationalisation which constitute the wording of this Motion.

Mr. Deputy-Speaker: I thank the hon. Gentleman. That is all we are discussing.

Mr. Nabarro: I thank you, Mr. Deputy-Speaker. I was provoked. Of course, I should not have been provoked. It will make the subject of an interesting debate another day as to the machinations and quarrels that went on in the Labour Party in 1950 and 1951.
I hope that the Motion will be rejected today. I apologise for the rather lengthy speech I have made on this occasion—

Mr. Mitchison: Go on.

Mr. Nabarro: —due to the fact that the issues raised by the hon. Member for Attercliffe were quite misconceived, have no relevance to present economic and financial circumstances and evidently ignored—neglected to perceive perhaps—that there is an Act of Parliament on the Statute Book which provides for the denationalisation of the industry and its return to private enterprise owners and puts statutory responsibilities for execution of that operation on the shoulders of the Iron and Steel Holding and Realisation Agency. I hope that the Motion will be rejected.

1.23 p.m.

Mr. G. R Mitchison: The interesting thing about the speech for the hon. Member for Kidderminster (Mr. Nabarro) was not its contents—they were not intended to be interesting—but the fact that the hon. Member, apparently with the support of the hon. Member for Aylesbury (Mr. Summers)—tell me if I am wrong—and with the general support of his hon. Friends around him—perhaps, for all I know, with the support of the Government Front Bench—found it necessary and advisable to make a speech like the one which he has delivered.
Quite clearly, it has only a nugatory relevance to the subject matter of the


Motion, and, speaking for myself, I am afraid that I can only draw the conclusion that certainly some hon. Gentlemen opposite—how representative they are on the whole of the divided Tory Party I cannot say—do not want the House to discuss the very inconvenient subject of the terms and conditions of an issue of iron and steel shares which has recently been made, and which, I may remind the House, includes among other companies the concern of John Summers & Sons, Ltd., and should, therefore, be of particular interest to the hon. Member for Aylesbury.
I am bound to say that I view this reluctance not altogether with surprise, but I should have thought it was a little clumsy not to try to answer the case that has been made but to produce the sort of speech to which we have listened today. I should be the first person to congratulate the hon. Member for Kidderminster on his powers of endurance, but I do not think I could really go beyond that.
Let me turn to the terms of the Motion and look at the effect of what has been done as regards this very important company. I think all of us would agree with what the hon. Member for Kidderminster said on one point; certainly the iron and steel companies during the period of nationalisation have done remarkably well. Their prices, for example, stand comparison with world prices, and, on a point more germane to the present issue, they have undertaken considerable development and have largely financed it out of their own pocket. That is the case as regards this company.
I wish to take one very simple point first. What we are concerned with is the charges by way of interest and dividend that have to be paid by this company. The hon. Gentleman's argument was that it does not very much matter how high the dividends are that are paid, that they are not really a very large item if they are counted as part of all the outgoings of the company. Unlike the hon. Member, I happen to represent a large number of steel workers.

Mr. Nabarro: So do I.

Mr. Mitchison: If he went and said that to them, if he came to Corby and said it, he might find on that occasion at all events that he would have a pretty hostile reception and demonstration.
It is not the way to encourage production in this country, which depends on the men working in the industry, to go to them and say, at a time when their own food prices are rising, "A little increase in dividends really does not matter." Nothing could be worse in the national interest than that sort of argument made publicly, however irresponsible the tone of the person making it may appear at the moment.
Turning to the nature of these charges. it is perfectly clear that before and during nationalisation the company was paying altogether, by way of dividends on its shares—at that time there were no debentures—a total of a little more than £1 million a year. That is the actual rate of dividends which had prevailed since 1947 as regards the ordinary shares, and which were fixed and paid accordingly on the preference capital.
It was paying that amount largely on ordinary capital. As the hon. Member for Aylesbury quite rightly pointed out, ordinary capital is risky to the extent that its dividends may rise or fall. Accordingly, it is not altogether unnatural that, if we look for the corresponding figure by way of the payment on steel stock, it is lower. I will come to that in a moment. Taking the pre-nationalisation company and the company during nationalisation, the total outgoings by way of dividends or other charges of the same character were a little over £1 million. I have the exact figure, but that is near enough for present purposes.
When we come to see what is happening under this issue we first of all find the following things. The ordinary capital has been increased by £4 million, getting on for half of what it was before; the 4½ per cent. preference capital remains the same, and there appear two new items. 4 million of 5¾ per cent. preference shares and 10 million of debentures. Taking the rate of dividend suggested in the offer of sale, the net result of this operation is going to be that the charge—I am using the word to cover both dividend and debenture interest—is just about double. It is going to be every


year rather over £2 million in place of what it was before and during nationalisation, when it was rather over £1 million.
I want to advance one further point and then I shall draw my conclusions. During nationalisation the company was paying its dividends to the Corporation, and, in fact, what really concerns the public, at any rate from one angle, is the amount of the iron and steel stock and the interest. Again speaking quite roughly, it is two-thirds of £1 million. There are three figures, and hon. Members opposite can take whichever they like. Let us take even the one that represents the charge on the company itself vis-à-vis the Corporation—it also represents the original charge on the company before nationalisation—or take the lower one which represents the iron and steel stock interest.
In either case we get a figure of either two-thirds of £1 million or just over £1 million. We now find that the charge on the company is actually over £2 million. I see the Financial Secretary to the Treasury sitting opposite me, and no doubt he is saying, "Yes, but that is only half the picture. A great deal of this money represents new capital." Let us see what is happening about the new capital. What is happening is that this company, until fairly recently, was paying for developments on a large scale out of its own resources. That is not only stated in the offer for sale, but it also appears from the Reports of the Iron and Steel Corporation.
When we look at the balance sheet, we find signs of it there. It was, of course, short of working capital and short of money to plough back into the business. There was nothing very unusual in that. It was rightly undertaking some very large development, but the actual position was—as one sees from the offer for sale—that the company had borrowed about £7 million within the organisation of the Iron and Steel Corporation, and up to date it has paid back a certain amount out of this issue, partly by giving up the shares it held in John Summers and partly out of the proceeds of the sale of shares and debentures.
It is still an internal matter, but the fact is that the interest charged is now double than what it was before. The company is paying 5 per cent. on the debentures

and 5¾ per cent. on the preference shares. Those are the types of capital that were applied for this purpose. Before, under a very successful arrangement made within the nationalised industry, there were borrowings from the surpluses of the other iron and steel companies and these were, as the Iron and Steel Corporation's last Report shows, at first at 3 per cent for the capital borrowed in that way.
Under the policy of hon. and right hon. Gentlemen opposite money has become dearer, and, consequently, the 3 per cent. that was the original rate for these internal loans becomes 4 per cent., but at the highest the rate was 4 per cent. and now for an internal loan of much the same character partly 5 per cent. and partly 5¾ per cent. is being paid.
Where is that money coming from? When we come down to brass tacks and the hard facts of the case, the answer is that these charges are to be paid by this company mainly as fixed charges and partly as an ordinary dividend, which has, in effect, been promised or nearly promised to those who subscribed for the shares of this issue. That is the first point.
The next point is this. When we look at the voting powers, we find it most remarkable that, though advances have been made by the public bodies concerned, the Realisation Agency only carries voting rights on default.

Mr. P. Roberts: Before the hon. and learned Gentleman gets on to that point and while he is on the issue of the rate of interest of the debentures, I should like to ask him a question. Leaving aside the issue of denationalisation and merely looking at the question of the debentures as a whole in the open market, is he suggesting that 4¾ per cent. is excessive, or would he have accepted it as being a proper rate? I did not follow him in that.

Mr. Mitchison: I think the hon. Gentleman has the figure wrong. It is not 4¾ per cent. at all. Probably he means 5 per cent. on the debentures. The figures are these: 5 per cent. on the debentures and 5¾ per cent. on some preference shares. Let me assure the hon. Gentleman that I am not supposing for a moment that the Government Agency, which acts under the directions of the


Treasury, is going to sell shares to the public without getting the best possible advice as to what can be got on the market and out of the market at the moment.
What I am pointing out, is that the inevitable result of what has been done is that the charge on the company as a company, by way of interest on the debentures and the preference shares and what are virtually promises made because of the terms of the offer for sale—though I agree it is not a promise of the kind that is enforceable—is more than double.
The first consequence of that is this. We are all concerned with production. On both sides of the House we are agreed that our national prosperity depends on it. We have no illusions about the importance of the iron and steel industry, and I think we can fairly say that its success in production and as an industry depends on two things. First of all, it depends on the proper development of the material machinery of the industry—the development of what is used on mining and in the works; and secondly, it depends on those who work in the industry. They are very largely the skilled men and some unskilled ones who operate the works all over the country. They are following the process first of nationalisation and then of denationalisation with a real interest, because it affects their own pay, their own employment and, they believe, their own security. What will they say when an issue is made which increases the dividends and debenture charges on the one company which has yet made an issue by doubling them?
Whatever defence may be put forward on technical grounds, and however it may be said that this is in some way explicable, it hits one in the eye, on looking at the offer for sale, that the capital and the loan capital of the company has been sharply increased, that the rate of interest has been increased and that the total charge by way of dividends has been increased, too.
Steel workers are not half-wits. They will see that just as well as anybody else. If hon. Gentlemen opposite are asking for trouble in an industry which has been singularly free from it, the kind of speech which we have just heard, saying that dividends and debenture interest do not

really matter, is the very best way to promote it. I regard any hon. Member who makes a speech of that sort, or who supports it being made, as singularly unmindful of the true national interest in this matter.
There are one or two other considerations which will hit people in the eye when they look at this offer for sale. One clear, simple, little feature emerges. It is that the expenses of the issue alone amounted to very nearly £500,000.

Mr. Nabarro: That point is not in dispute, but would the hon. and learned Gentleman add that the £500,000 represented approximately 1 per cent. of the aggregate value of all applications made for stock and shares and. thus, it is a very tiny figure?

Mr. Mitchison: That interruption was just about as pointless as the greater part of the speech which the hon. Gentleman made earlier. What on earth has it to do with the plain fact that nearly £500,000 is being spent in advertising, under-writing and issuing in the ordinary way this lot of shares? The point I am trying to make is whether or not that kind of matter is something which will appeal to the workers in the industry when they know that one immediate result of denationalisation has been that a number of highly respectable firms of bankers and issuing houses, a number of other people engaged in the advertising trade and the rest of it, have made £500,000 out of this move. It is a move which the hon. Member for Kidderminster clearly explained to us as part of the high policy of the Tory Party.

Mr. Nabarro: Will the hon. and learned Gentleman give way? I gave way to him many times.

Mr. Mitchison: The hon. Gentleman did not, but I will give way.

Mr. Nabarro: I gave way three times to the hon. and learned Gentleman. Why does he consider that it is illicit and unworthy for issue charges to be incurred in the instance of the resale of steel stock when, for instance, another nationalised industry, the British Electricity Authority, only a few months ago incurred a very much higher charge for exactly the same purpose of raising money on the market?

Mr. Mitchison: I never said anything about it being illicit or unworthy to pay £500,000 by way of issue charges and the like. I said, and I repeat, that that payment comes entirely from the high policy of the Tory Party, and that the ordinary steel worker will deplore a policy which has that as one of its results.

Mr. J. E. S. Simon: Would not the hon. and learned Gentleman agree that very nearly as large a sum was incurred in the expense of issue and management of British iron and steel stock? The figures are in the Report of the Corporation.

Mr. Mitchison: Certainly. The hon. and learned Gentleman talks about iron and steel stock. He should remember that that represents the whole industry, whereas this represents one company. The point is that the men who are working in the works will see this company paying out £500,000 in respect of this issue to the bankers, underwriters, advertisers, and all the rest of it. I do not say that there is anything illicit or unworthy. What I say is that if one comes to consider whether an issue of this sort was wisely planned, perhaps it is not so relevant; but if one comes to consider whether an issue of this sort ought to have been made at all, then it is relevant. We cannot believe that that kind of thing does not have a really serious effect on the people who work in the industry and that its defence in this House, if it is defended, does not do considerable discredit in the eyes of the public to the party responsible for it.
I am sorry to take up so much time in my turn, but I think I am entitled to it. It is true that some of the money now charged upon this company represents new capital which is required for extension. It is true that some of it was to pay back a loan, and I have already dealt with that. The fact remains, at the end of all this, that the book value of the assets of the company in the last Report of the Iron and Steal Corporation was a matter of £21 million. It is now to be represented by an ordinary capital of £23 million and a debenture issue of £10 million.
Whether we look at the interest or at the actual capital involved, I draw the conclusion that if this had been a private concern we would say that it had been blowing up its capital with a view to

making a presentable issue. It certainly has that appearance when we see that the actual net requirements for expenditure are small. It is true that the company wants about £13,250,000 for expenditure which it has in mind and has not yet started. On the other hand, it appears to have about £9,250,000 available for that. It is, therefore, not a case of providing for a very large amount of future expenditure.
Lastly, I come to the impact of this issue on the public and the prospects for the future. The issue was made. It was thoroughly advertised. It had a political flavour that might well have been attractive to some of the supporters of right hon. and hon. Gentlemen opposite. We must admit, broadly speaking, that they have a bit more money than we have on this side of the House, and it was to be expected that the issue would go well. I was not surprised at the large number of applications. It was exactly what I expected. The Financial Secretary to the Treasury, who appears to combine with a great financial knowledge a certain quick aptitude in zoological matters, would agree that on this occasion there was a considerable amount not of "Hynd-ing" but of stagging. It was to be expected. The result of the operation was that when that was all over, the issue having been made at about the right market figure, the shares went to a discount.
What was the reason? It will be said, possibly, that the reason was what one newspaper described as the "Strauss pistol." I do not think that was the main reason. I think that the main reason was that those who were thinking of buying these shares had a look at the prospectus and they drew from it some of the conclusions which I have drawn myself, that the Treasury and the Agency between them had blown-up the capital, that there were risks attendant on the ordinary shares which used not to be there, and that this was a good deal more risky, than, at first sight, one would have expected.
I say this to the Government. I think that this will have done quite a lot of harm as regards the workers in the industry. I do not think that it is a very agreeable thing that a prospectus, issued as part of Government policy and with Government sanction behind it, should


cause this impression not only on me, because I may be prejudiced, but on the mass of people who were thinking of subscribing and who have had to deal in the shares. It does not look too good. I should have thought that issues of this sort should be very clearly expressed in the terms when they are made, that they ought to be obvious to anybody, and that they ought to stand well above any suspicion that the Government and the Agency between them had been blowing-up capital, putting too much on the companies and all the rest of it.
I regard this as a thoroughly unsatisfactory bit of business both for its effect on the national interest as regards production, for its effect in consequence on the steel industry itself, and for the comparatively small but quite distinct contribution which it has already made to lowering the already somewhat shadv reputation of the present Government.

1.53 p.m.

Mr. Eric Johnson: At first sight, I was inclined to welcome the action of the hon. Gentleman the Member for Attercliffe (Mr. J. Hynd) in drawing attention to this matter, particularly the terms and conditions governing the sale of the shares of the denationalised steel industry. I welcomed it because it seemed to me to be a good opportunity to congratulate Her Majesty's Government and more particularly, I think, the Holding and Realisation Agency on the very good start it had made.
It is surely a tribute to the Government's policy and to the financial strength of our leading steel companies that it has been possible to recapitalise them, to offer their shares on a dividend and earnings yield basis which is attractive to investors, and, at the same time, to make a profit on the deal. I know that the hon. Member for Attercliffe took a different view on this question of profit and loss. I make my observations in view of what I read on the subject in the "Financial Times"; and whatever people may think of its political opinions, I would suggest that it would not carry on publication for very long in its particularly specialised field if it did not know the difference between profit and loss.
I cannot follow the arguments of the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison), because I am far from being an expert on the financial aspects of this matter. I can only express the point of view of the layman, which I think is fairly widely shared, that one possible explanation of the fact that it has been possible to satisfy the buyers of these denationalised steel shares and at the same time to sell them for more than the State paid for them may be the fact that the terms on which the industry was taken over by the State in the first place were something very much akin to highway robbery.

Mr. Mitchison: Perhaps the hon. Member would allow me to remind him that what we are considering now are the Stock Exchange prices, and the take-over prices were also Stock Exchange prices. If they constituted highway robbery at one time, presumably they do both times.

Mr. Johnson: I do not quite follow that line of reasoning. It may be that my hon. Friends who are more qualified to deal with the financial side will demolish that argument most effectively later on.
I suppose that I was unduly innocent and expected too much in hoping that hon. Members opposite would take this opportunity of saying a few words of well-deserved praise to Her Majesty's Government for the success, as it seems to me. of their policy. On the contrary, regrettable as it may be, the hon. Member for Attercliffe in his Motion expressed the opinion that the terms and conditions of the sale of these securities will impose a heavy burden on the steel industry, on the workers and on the consumers. If it were not for the reference to the consumers, I would not have ventured to say anything this afternoon.
It is mainly with the effect on the consumers of steel that I want to deal. As to the suggestion that it will impose a heavy burden on the industry itself, I think that has been fairly fully dealt with by my hon. Friend the Member for Kidderminster (Mr. Nabarro) and will, I am sure, be further dealt with by other hon. Members who have a more direct knowledge of the steel industry than I have. All I can say is that the industry seems to be making a very noble attempt to bear this burden, as shown by the


fact that steel production last month was at a record level, and I do not think that the management of any of these firms which have now been liberated, and who ought to be fairly good judges of the matter, would want to revert to State ownership.
As to the effect on the workers, I cannot understand how they can possibly be harmed by the terms of the sale of the securities of the denationalised firms. The hon. Member for Attercliffe seemed to me to suggest that wages would be cut down so that dividends could be kept up. I do not know whether he really meant that. I cannot believe that he did. The hon. Member for Swansea, East (Mr. Mort), who spoke with very great sincerity and very real knowledge of this matter, as I know, failed to convince me that the only time the steel workers have ever been happy was during the short time when the industry was under State ownership.
I should have thought, at any rate, that one very obvious advantage they would derive from denationalisation is that their leaders will now be able to deal direct with their own companies instead of having to go to some centralised authority in London. That seems to me to be particularly important when we recall that the relations which existed in the industry between management and labour for many years were remarkably good. I do not think that I shall be contradicted in regard to that statement.
If I may turn to the consumers, I welcome the solicitude now being shown by the party opposite for those firms in private enterprise which consumeso much steel, because I pay them the compliment of assuming that they are concerned with the private enterprise consumers as well as with the railways, gas and electricity undertakings. I do not want to be unfair in this matter, but I am bound to say that some of the consumers of steel feel that this newly-found Socialist concern for their welfare has come a little bit late in the day. They feel that it is rather a pity that a little more thought was not given to the interests of consumers when the industry was taken over. It was certainly not the view of many consumers that they would benefit by nationalisation.
However, I am happy today to be able to reassure the hon. Member for Atter-

cliffe and his hon. Friends that their anxiety about the burden which they state will be placed on the consumers is not shared by many of the consumers themselves. The whole burden of what I want to say is that, in so far as the consumers are concerned, they are perfectly well satisfied with the terms on which the industry is being returned to private enterprise. What the consumer is concerned about most is the price, the quality and the deliveries of the steel he wants, and he does not feel—and I say this with some knowledge of the matter—that he will be in any way adversely affected by this state of affairs.
I have with me a letter from a firm which is a very large consumer of steel, and I should like to read one paragraph from it. It states:
We have no qualms about the effect on steel prices of the price at which the various units of the steel industry will be returned to private enterprise.
That seems to me to be fairly definite, coming from a very large firm consuming something like 3,000 tons per week. The letter goes on:
We would also add that it has been our experience that there has been a big increase in the amount of steel available since the passing of the Iron and Steel Act, 1953.

Mr. Mitchison: And before it. There was a big increase during nationalisation.

Mr. Johnson: That is perfectly correct, but the increase has gone on and is now even greater. So far as this firm is concerned, although there was a general increase in the output of steel, the particular quality which they used was in short supply while steel was nationalised, and the supplies made available to that firm have increased very considerably indeed since the industry was denationalised. I think that is a very valuable expression of opinion, and, much as I respect the views of hon. Gentlemen opposite who have knowledge of this industry, it seems to me that the views of a firm which buys steel carry more weight than the views of those who are concerned mainly with political affairs, economics and matters of that kind.
What I have said in regard to more steel being available is not by any means the end of the very satisfactory story of the great improvement in the industry since denationalisation. I am given to


understand that there has not only been a marked improvement in the quantity of steel available, but that the quality has improved, and. furthermore, that the speed of delivery is very much better than it was. There is no doubt at all that, as far as some of the steel consuming industries are concerned, the period, brief as it was, during which steel was nationalised was marked by delays in deliveries and by poor-quality steel. There may have been perfectly good explanations for that, and I am not prepared to say more about it—

Mr. Norman Smith: On a point of order. Is it in order for the hon. Member for Blackley (Mr. E. Johnson) to indulge in an argument which is really a discussion of the merits or demerits of nationalisation or denationalisation? Is it not indeed outside the terms of this Motion, as your predecessor in the Chair ruled?

Mr. Deputy-Speaker (Mr. Hopkin Morris): I think that would be outside the terms of the Motion, but I understood that the hon. Member for Blackley (Mr. E. Johnson) was relating his argument to the effect of denationalisation.

Sir Edward Boyle: Further to that point of order. The Motion specifically says that this House agrees that the terms and conditions of sale will
impose a heavy burden on the steel industry, on the workers, and on consumers of steel.
Is not my hon. Friend entitled to point out the effect of the measures that are now being taken in improving the position of consumers?

Mr. Deputy-Speaker: That is the point to which I thought the hon. Member for Blackley was relating his argument, and not to any general argument on nationalisation.

Mr. Boyd-Carpenter: Further to that point of order. Mr. Speaker did rule when the question was raised, that, although the main subject matter of the Motion was not directly connected with nationalisation or denationalisation, it was impossible to exclude certain references to the merits of those two particular Measures.

Mr. Deputy-Speaker: I understood the argument of the hon. Member for Blackley to be related to the effect on consumers of steel.

Mr. Johnson: That was what I was endeavouring to do, and I was saying that the consumer was not only not particularly disturbed by the terms on which the industry was being sold back to private enterprise, but was indeed so pleased with the results of this action that he felt that the price, such as it was, was very well worth paying, and, indeed, that a higher price might even have been justified, so far as the consumer was concerned.
There may be a perfectly good explanation of the fact that the consumer suffered during nationalisation and is better off now that the industry has been freed, but if that is not so, I think it is for those who advocate nationalisation and say that the consumer was better off then to prove that that was so. The fact remains, whatever explanation may be given, that supplies have increased, that quality is better, that deliveries are better and that the consumer is perfectly well satisfied over this question of the take-over price.
I hope I may be in order in saying a brief word or two in an effort to make amends to my right hon. Friend the Minister of Supply for some thoughts which I harboured, although I kept them to myself, concerning an answer to a supplementary question which I put to him on 5th May, after my right hon. Friend had made a statement about steel supplies, to which my hon. Friend the Member for Kidderminster (Mr. Nabarro) drew attention earlier today. My right hon. Friend referred to the very satisfactory figures, and I then asked him—and this has some bearing on what I have been saying—whether the figures applied to billets for re-rolling. My right hon. Friend replied:
I am referring to steel as a whole. Of course, it will cover billets, but there may be special difficulties due to particular types."—OFFICIAL REPORT. 5th May, 1953; Vol. 515. c. 212.]
At that time, I was not altogether convinced by that answer in regard to billets, and it is therefore with particular pleasure that I now admit I was wrong. I am sure that the hon. Member for Attercliffe, and other hon. Members opposite who show unusual interest in the welfare of


consumers, will share my satisfaction at this happy state of affairs.
It seems to me that the political factor has a good deal to do with the improvement in the position. The House will recall the steel industry's development plan for the post-wars period, and I hope that what I have to say is in order, because the whole future of the development plan is surely affected by the terms on which the industry is sold back to private owners. Under that plan, some firms, whose raw material is semi-finished steel, undertook to put up new and sometimes very extensive plants on the understanding that the steel industry in its turn would set up new plants from which to provide them with their raw materials. Progress in all the cases was not quite as rapid as was hoped, and in some cases the consumers' plants were finished before those of the producers.
I do not know the technical reasons for that, but obviously, in the period immediately after the war, there were bound to be a good many shortages and there had to be a system of priorities. There was a very definite political explanation for this delay, and it was surely the uncertainty which existed in the steel industry about the Labour Party's policy in regard to the future of the industry. Perhaps there ought not to have been that uncertainty, because it was, after all, fairly clear that, sooner or later and in some way or another, a Socialist Government did intend to nationalise steel, though I suppose that in the industry there were bound to be some who hoped that wiser counsels would prevail.

Mr. Deputy-Speaker: The hon. Member is going a little too far now.

Mr. Johnson: I am much obliged to you, Mr. Deputy-Speaker, for calling my attention to that point. I was endeavouring to come back to the point that the industry has now been freed on terms which are satisfactory to the consumer, and which we believe on this side of the House will not place an unduly heavy strain on the consumer. That is the point to which I was arriving by, I am afraid, rather a devious path. It will now be possible for the industry to press on with its great development plan, which was partly completed before but owing to political uncertainty was interrupted.

Now that there is freedom from political uncertainty the industry, returned to private ownership on these satisfactory terms, will be able to press on with the development plan.
In speaking of consumers of steel, we have been thinking largely of domestic consumers. I believe it would be in order to say something about consumers abroad who are concerned just as much with the price of the finished article as are our domestic consumers. The steel industry has, either directly or indirectly, made a great contribution in the past to our export trade. I have no hesitation in saying that it is very fortunate that the industry has been denationalised at a time when we are facing increased difficulty in the export markets and greater foreign competition.
The consumer abroad is naturally concerned in this matter, and will share the general satisfaction felt by consumers in this country that steel has been freed. He will watch with great interest the take-over of the steel industry, backed by private enterprise. He would be very much concerned if he thought that burdens of too great a character were being put on the industry. I do not think that these facts prove the good sense of the hon. Member's Motion.
I do not claim to know intimately the steel-making side of the industry, nor to have knowledge of the actual views of the steel workers, but nothing that has been said by hon. Gentlemen opposite has led me to suppose that the terms on which the shares have been sold back have put a burden on the industry, or will have ill effects upon the workers. I have endeavoured to show that the consumer's interests are very well satisfied. Is it too much to hope, after what has been said on this side of the House, that the hon. Member for Attercliffe will be so reassured with the position that he will be willing to ask leave to withdraw the Motion?

Sir E. Boyle: I do not see how the hon. Member for Attercliffe can be expected to do that, because he has hardly listened to this debate since he made his speech.

Mr. Johnson: In the circumstances, I hope that the House will firmly reject the hon. Member's very unwise Motion.

2.13 p.m.

Mr. Frederick Mulley: At the outset, I must refute the remark, which was quite unworthy of the hon. Member for Handsworth (Sir E. Boyle), about my hon. Friend the Member for Attercliffe(Mr. J. Hynd), who has been pretty constant in his attendance, quite as long as the hon. Member for Handsworth.

Mr. P. Roberts: I have been here the whole time during the debate. My recollection is that the hon. Member who moved the Motion went out of the Chamber almost directly afterwards and has hardly been back yet.

Mr. Mulley: After the very wearying speech of the hon. Member for Kidderminster (Mr. Nabarro) we may expect hon. Members to be in need of refreshment. I hope that this point will not be continued unduly.
My first reference is to the speech of the hon. Member for Blackley (Mr. E. Johnson) who, before he got tangled up with the consumers, made observations about the prices of shares. He ventured to say that the issue showed a profit. How he can say that, when he admitted he has little financial knowledge, I do not know. The ordinary shares, which were bought by the Iron and Steel Corporation for 30s. 4d., are now sold at 25s.; how that shows a profit is beyond my comprehension. [HON. MEMBERS: "Oh."] I might point out, in fairness, that there has been a capital reorganisation in preparation for this return to the investor, and of course there has also been a substantial building-up of capital assets during the period of nationalisation.
During that period a very small dividend, averaging 8 per cent., on the ordinary shares was paid by the United Steel Company to the British Iron and Steel Corporation. On my calculations, we paid compensation of £15½ million for the equity shareholdings. The sale of the equity shareholdings which has just been completed has realised £17½ million gross—making no calculation for expenses, which are a very important item. It seems to me that the £2 million extra obtained by the sale of the equity interest is very much less than the addition to the capital assets during the period of nationalisation. I hope that the Financial

Secretary will deal with this point. I know that the firm has sold its holding in John Summers and has incurred certain other obligations by way of loans, but it has been expending all the money it has borrowed, putting it to very good use in expanding its production, as the figures indicate.

Mr. E. Johnson: Surely the hon. Member recalls that the hon. Member for Attercliffe quoted figures showing that the shares had been sold back for more than the State paid for them. That was my reason for suggesting that a profit had been made, a view which happens to be shared by the "Financial Times."

Mr. Mulley: I am not arguing about what the hon. Gentleman said. I merely referred him to the official price at which the shares were quoted and the price at which they were sold. About the actual figure there can be no argument. As to the expenditure on capital appreciation because of the building up of assets during the period of nationalisation, I hope that we shall have a very clear statement on the matter from the Financial Secretary so that we can see whether, in getting rid of the equity interests, the taxpayers have been considered. We, as representatives of the taxpayers, have to satisfy ourselves on such matters. I hope we shall have a very clear statement.
It will be within the recollection of hon. Members that when the Bill was passing through Committee we sought to insert a Clause in it to safeguard the taxpayer and ensure that no shares would be sold back to the public below the price at which they had been acquired. It will also be within the recollection of hon. Members opposite that they resisted that attempt in the Lobbies. We had the assurance from the Financial Secretary at the time that this point would be very much in the mind of the Chancellor of the Exchequer when approving these issues. I hope that the hon. Gentleman will assure us on that point today, as he has not done so so far.
I am very sorry that the hon. Member for Aylesbury (Mr. Summers) has had to leave the Chamber, because it was my intention to give him notice that I would refer to one of the interjections he made during the speech of my hon. Friend the Member for Attercliffe. I was very concerned at the pessimistic note he


struck. Hon. Members opposite have talked about us on this side of the House and about this Motion making it more difficult for subsequent issues of stock to be sold.
I was very impressed by the emphasis which the hon. Member for Aylesbury laid on the fact that a 9 per cent. dividend might, in fact, not be possible because the firm might run at a loss. That is a very serious statement for an hon. Member, who, as the hon. Member for Kidderminster said, has an incomparable knowledge of and interest in the steel industry. If I were an investor in steel, I should be much impressed by what he said. I would say that the intervention of the hon. Member would be a great embarrassment to the Treasury when they come to sell subsequent issues of stock. The hon. Gentleman said that we cannot take the 9 per cent. as a firm figure because the firm might have to run at a loss owing to conditions in the steel industry.

Mr. Stevens: I am sure that the hon. Gentleman has a considerable knowledge of these things, but has he ever seen a prospectus in which the sponsors of a share issue have guaranteed for any time in the future the rate of dividend of the shares, and, if so, will he tell us the results of the prosecutions arising from such cases?

Mr. Mulley: The hon. Gentleman, with some skill, tries to divert me from the point. Obviously I have not seen such a prospectus, but that is not the point I am making. I hope that the hon. Gentleman is not about to leave the Chamber, because I should like his assistance on a further suggestion which I am going to put to the Financial Secretary in a moment or two. I know that the hon. Gentleman has a wide knowledge of these things.
The point I was making was that the remarks of the hon. Member for Aylesbury, who has a great knowledge of these matters, would not be very helpful when further issues are offered. He said that one could not work on the assumption that 9 per cent. would be paid year by year, and that, therefore, the price was justified.

Mr. P. Roberts: It is the 7⅕ per cent. and not the 9 per cent. which should be discussed.

Mr. Mulley: If I may put the hon. Member right, the 9 per cent. is the figure mentioned in the prospectus. The 7⅕ per cent. was merely the calculation based on the assumption that one acquired the shares at 25s. The figure about which I was talking was the rate which the company would declare. Since the hon. Member for Heeley (Mr. P. Roberts) has intervened, I shall deal with the point Which he made earlier when he said that it was, of course, the prospects of the industry which determined the price and not the machinations of the Stock Exchange. In that case, how is it that in the last fortnight the same shares have dropped by 15 per cent. The 5s. share was standing at 5s. 3d., and is today quoted at only 4s. 6d. I am quite sure that nothing has happened in the industry to justify such a substantial drop in the price of the shares.
I should also have liked to deal with the hon. Member for Kidderminster. I am sorry that he is not in his place, but I can quite understand that he has good reason for relaxation after a very prolonged test of endurance. I was greatly relieved at the beginning of his speech when he was at pains to stress the constitutional position. He said that if it is the will of Parliament that the industry should be denationalised it is unconstitutional to criticise such a decision afterwards. It was some comfort to me to know that when on a subsequent occasion Parliament decides to re-nationalise the industry, the hon. Member for Kidderminster will not raise his voice in complaint thereafter.
It is a pity that his counsels were not better heeded by the party opposite, because on several occasions after Parliament had decided to nationalise the industry, they sought every Parliamentary opportunity to complain about it. Therefore, I cannot think it can possibly be argued that we are being unconstitutional or that there is any nonsense of that sort in our raising this very proper matter today in order to be told how the taxpayer's interest has been safeguarded in regard to the issue of the United Steel stock.
It seems to me that there are two matters which need clarification. The first is the actual price and method of sale, and, the second, the reasons why


such a substantial part of the capital of the company has been retained by the Agency. I shall deal first with the question of price. It is my contention that the price asked for the shares is too low having regard to all the circumstances.
It is, of course, true, as I have already quoted, that the shares today are at a discount, but I think that that can be very readily explained by the fact that on 15th December there will fall due the second allotment. Members of the public holding these shares will be obliged on that day to pay a further 10s. As we all know, there was great speculation at the time of the original issue among people hoping to make a quick profit. They applied for shares. but, of course, they had no intention of holding them. In many cases, they have not the capital with which to pay the further 10s. Therefore, I think we shall see, after the shares have become fully paid up, that the view I am now expressing will be substantiated, and that the shares will be quoted at above 25s.
I am taking a much more optimistic view of United Steel's position under free enterprise than does the hon. Member for Aylesbury. I think that the proper assessment of the 25s. per share is to be obtained from the financial papers, because, as the hon. Member for Blackley said, if the "Financial Times" and the "Economist" did not know the difference between profit and loss they would not have very large circulations. The "Financial Times" said on 26th October that the industrial ordinary index was 5·57 per cent., but that the shares of United Steel would give a 7¼ per cent. yield. It went on:
As things stand at present, the yield investors are being offered seems nicely pitched to leave a balance on the right side.
That was the conclusion of the leading article on the subject in the "Financial Times" on 26th' October after a full discussion of the political risks involved and the possibility that full account would be taken of dividends paid in assessing a future take-over price.
Great emphasis was laid by the financial papers on the fact that the 9 per cent. dividend was covered three times by the modest profit expectation included

in the prospectus. The "Financial Times" of the same date said:
And not only is the whole British steel industry well placed in the matter of modernisation and efficiency to meet these new conditions, but United Steel is well placed within the British steel industry as a whole.
I am sure that the hon. Member for Heeley, who represents a Sheffield constituency and who is familiar with some of the work of this company, will agree that that is very true. I continue the quotation:
There is always an industrial risk on an Ordinary share. The risk in holding United Steel shares, from this point of view, is not more than normal.
The considered opinion of the financial Press was that the price was particularly attractive, having regard to all the considerations.
The "Economist" of 31st October, and these quotations, of course, were all before the actual issue, said:
By taking a short cut through these complications it is dear that 25s. a share does not overstate the asset value of United Steel.

Sir E. Boyle: The same quotation from the "Economist" also said that the price and terms gave nothing lavish away.

Mr. Mulley: I think the hon. Gentleman will agree that it is "lavish" which is the word. I am here, as a representative of the public, to see that there is no extravagance, and I would put the emphasis on that word "lavish." We on this side of the House do not want any extravagance, or the giving away of anything at all; it is not a question of giving away anything lavish.
If I might conclude on that particular point, there is a doubt in my mind, I say no more than that, as to whether the 25s. was the right price. If I were on the benches opposite and paid a lot of regard to the law of supply and demand which we have had preached to us very often in the past, I should not have been satisfied to find that the demand for the shares was £42 million and the supply was only £14 million. According to the laws of basic economics, which are, I believe, the economic "bible" of hon. Gentlemen opposite, the price, on that basis, should have been higher in order to equate supply and demand. If supply is much below demand, the basic


laws of economics say that the price should be raised until the two are equated. We have had a lot of that sort of argument from the benches opposite, and I think those former arguments are apposite to this case, and that the over-subscription bears me out. The price was too low, and the consequence of the price being too low is that the taxpayer has suffered a loss.
I wish to say just a word about the consequences to the workers in the industry and, of course, to the community at large of this issue of shares, because of the implications in the price of sale and so on. The Financial Secretary will have the figures with him, I think, and it is possible that my arithmetic may not be 100 per cent. accurate. I have calculated that the interest obligations of the United Steel Companies, before this issue, amounted to approximately £1 million a year, made up, of course, of the 4½ per cent. on the cumulative preference shares, and an ordinary dividend of 8 per cent, on the then 10 million ordinary shares issued.
As a result of this issue they now have a dividend and interest commitment, excluding debentures, of somewhere around £1,700,000. The assumption there is the very reasonable one that the indication in the prospectus of paying a dividend of 9 per cent. on these shares will be honoured. That means that the interest obligation of the firm has been increased by 70 per cent., about £750,000, and that is making no calculation whatever for the debenture shares. It can be argued that if they had been retained in public ownership they would still have needed this additional £10 million capital, and therefore it is probably fairer—as I have done—to leave out of consideration the charge on the debentures.
I suggest that if they had remained in public ownership they would not have had to pay 4¾ per cent. for that £10 million loan. They might well have got it for 3¾ per cent. That difference, therefore, represents another £100,000 liability for interest and dividend. In other words, the workers and managers in that industry have to provide at least 80 per cent. more for the non-productive part of the concern. That is a matter of very real interest to the workers, managers, and the consumers concerned with this company.
While £750,000 additional burden may seem very little—we had the lion. Member for Kidderminster dismiss it with one of his famous flicks of the hand—it is a lot of money. And this is only one company. There has to be added, in the first year, the £500,000 cost of making the issue. It is a very serious drain on the industry as a whole, and I think that the hon. Gentleman for Attercliffe was justified in using the words he did in framing his Motion. I hope we shall have a very substantial explanation from the Financial Secretary as to why these things have happened. We are not arguing about the pros and cons of nationalisation. We want Parliament, having taken a decision with which we do not agree, but which we do respect, to see that the taxpayer comes out as well as he possibly can.
What I regard as the most monstrous aspect of this re-issue is the retention in the hands of the Agency of more than half the capital. I asked the hon. Member for Langstone (Mr. G. P. Stevens) if he would be good enough to remain in his place as I might need his assistance. I now come to the point when I should like that assistance. I should like him. with his great knowledge of these matters, to tell us if he knows of any case at all in private industry where someone is prepared to put up more than half of the capital for an enterprise yet not to have a single vote at the general meeting, of a single director on the board. That is the position in which the Government has placed the taxpayer today.
Roughly speaking, of the £38 million that I calculate to be the capital value of this company, £20 million are in the hands of the Agency, representing the taxpayer, and its only power is the ordinary power, which the Financial Secretary told me exists in this class of share, by way of default. Obviously, there is a case for cumulative preference shares and debentures, but never in the case of any enterprise or business has a shareholder had well over half the capital of the company and not a single voice at the general meeting or a single director on the board.
It may well be that it is the intention of the Agency to sell this interest. The Financial Secretary was good enough, in reply to a Question which I put to him. to suggest that that was their intention, and he said that it had been announced.


As I always accept the word of the Financial Secretary, I accept that it has been announced, but I doubt very much if all the people who bought shares in United Steel were aware of the Agency's intention to sell that preference and debenture holding. I think it was included, in very small type, somewhere in the prospectus and in the offer for sale, but no prominence was given to it. Since they have taken the decision to sell these cumulative preference shares, I hope the Financial Secretary will tell us what plans the Agency have and at what price they propose to sell in future, because it is a very important matter.
The interesting point about this reorganisation is that this outcome was deliberately planned by the Treasury, because they had to reorganise the capital structure of the company to achieve its purpose. Before October of this year, within a few days of the actual issue of the offer for sale, the ordinary issued share capital of United Steel, the equity capital, was very much larger than the cumulative preference capital. It was a ratio of two ordinary to one preference share. It has been deliberately changed, so that the equity interest, the people who will get the benefit of any increased profits when that very valuable consideration has been sold by the Treasury, will be changed, leaving the taxpayer, having more than half the money in the firm, only able to get a very small return.
I hope on this point that we shall get a clear statement from the Financial Secretary that this is not the general intention of the Government. We have heard so much clap-trap from hon. Members opposite on the subject of free enterprise, the virtues of private economy and so on, and if they want to put their beliefs to the test they should do so with their own money and not the taxpayers' money. Perhaps we can hear from hon. Members opposite about the virtues of private enterprise in an industry which they admit cannot be left to its own devices and for which some form of public control is essential, for which they have made provision in their Bill. Not only does it need public control because it cannot be trusted to run itself without supervision, but it cannot run itself without having half its money from the State.
Is this the new form of free enterprise that the Government have in mind? Is this the new Toryism? They should be frank with the taxpayer and say, "We want the profits from the industry but you must provide the money." The equity shares have been sold, but the obligation to provide the finance still remains with the nation as represented by the Treasury. Before we leave this matter today, could we have a clear statement not only on this issue but on the intentions of the Government when subsequent issues are made to the public?

2.42 p.m.

Mr. Peter Roberts: I am grateful to you, Mr. Speaker, for allowing me to catch your eye after the speech of the hon. Member for Sheffield, Park (Mr. Mulley), because I feel that a number of things should be pointed out to him, particularly on the question of the price of shares, and I welcome this opportunity of doing so.
First, I should like to thank the hon. Member for Attercliffe (Mr. J. Hynd) for raising this matter at this time. There has been a certain amount of wondering about what the weight of the attack of the Opposition was going to be, and having listened to that attack, I realise now how light it is and how easy it is for those in possession of the facts to dispose of the arguments adduced by the Opposition.
The first point that I should like to deal with is the statement in the Motion, which I think is the main charge of the Opposition, that the various circumstances and prices will impose a heavy burden upon the industry. Having listened to the arguments, I am satisfied that the Opposition have not in any way substantiated that charge of a heavy burden. Let me turn, first of all, to the question of price which the hon. Member for Sheffield, Park raised.

Mr. Paget: Before the hon. Gentleman leaves that point, may I ask him one question? Does he regard an extra financial charge of between £750,000 and £1 million per annum, for which no benefit whatever is received, as a substantial charge or not?

Mr. Roberts: I shall come to the point that I want to make, and that is the difference between the financing of a nationalised industry and the financing of


an industry under private enterprise and Government control. That is an argument that I am prepared to face, and I shall deal later with the question of price, which the hon. Member for Attercliffe raised.
I may have to give a few figures, and I hope I shall be forgiven, but I will simplify them as much as I can. If one cares to find out how much the Government paid for the United Steel shares in the first place, one finds that the figure came to something over £22 million. The price was 22s. 4d. for the preference shares, 30s. 10d. for the ordinary shares, and since that time £1½ million has been added while the assets were in the hands of the Corporation. Therefore, one can say that the total cost was £22,780,000.
Since that time, léavingout the question of the debentures and the various share deals which were done with regard to the loan finance, which I do not think comes into this matter, there was a further £4,200,000 of assets ploughed back into the business during the period that it has been under development by the Corporation. Therefore, we get a total figure of something in the neighbourhood of £26.900,000 which the State has taken over and put into the business since the period of nationalisation.
The Realisation Agency has sold 14 million ordinary shares at 25s., which comes to £17,500,000. I hope the hon. Member is following me, because I am going into this in some detail in order to answer him on the point which he raised. Then there are the preference shares which are still in the hands of the Agency—5 million and 4 million respectively—and one has to put a figure on that item. I suggest that if we put a figure of 19s. 6d. on the 4½ per cent. shares, and 24s. on the 5¾per cent. shares, both of which figures I think are reasonable in the case of big undertakings of this kind, we get a figure of £27,650,000. Allowing for the costs of the issue, there is a slight profit to the Government of £300,000. Those are the facts, and I think they are satisfactory.
The people with great knowledge—and it has not been suggested that the Treasury or the Realisation Agency have not great financial knowledge—have worked this out and are satisfied that it balances reasonably with the figures

before them. I hope that the hon. Member for Sheffield, Park, after having perused those figures, if he has not been able to follow them in the short space of time that I have had to give them, will be satisfied that the transaction covers the taxpayer for the amount of money which he has put in.

Mr. Fienburgh: Did not the hon. Gentleman include in the price which the Agency received for these assets the price of the cumulative preference and the redeemable cumulative preference shares? If so, how on earth can he call that income to the Agency when it already owns it?

Mr. Roberts: I do not quite follow that point. I did bring in the preference shares which were taken over by the State, which amount to £5,800,000.

Mr. Mulley: The Agency has not made a profit. It is speculative as to whether it will get 24s. for the 5¾ per cent. preference shares. If the existing ordinary stock is below 25s., I do not see how 5¾ per cent. attracts the investor to pay a higher price for them. Therefore, this profit which the hon. Member has found has yet to be earned.

Mr. Roberts: I appreciate that this is no more than an estimate, but it is the best estimate that I can make. It depends on what price we put on the preference shares which are still held by the Realisation Agency, but, comparing the price I have given with the price of preference shares of other big Corporations of the same kind as this, one finds that they are more or less in line.

Mr. Ivor Owen Thomas: Does the hon. Gentleman agree that the conclusion which he draws is based on what he admits is an estimate, which is used to prove that the Corporation is making a definite profit? If so, his conclusion is merely guesswork.

Mr. Roberts: I was trying to answer the hon. Member for Sheffield, Park when he asked whether there was a profit. All I am saying is that, on the figures, it appears that there is definitely no selling away of the assets of the taxpayer for something less than they are worth. I think that is a substantial point, because there have been suggestions that there was a loss to the taxpayer.
Now I come to the question which the hon. and learned Member for Northampton (Mr. Paget) raised with me, the extra cost which this no doubt will put on the industry by taking it out of the realm of the finance of a nationalised Corporation into the realm of a private enterprise organisation controlled by the Government. I submit that this is the difference between us: hon. and right hon. Gentlemen opposite say that the industry would be better run by a nationalised concern, we feel differently. We appreciate that there is some financial difference in the rates of interest, but I do not think that the debate today should pinpoint that fact because we all recognise it.
What I think hon. Members opposite are attacking today is that the difference is in some way out of proportion to what it ought to be. Quite frankly, that is another thing which I am glad has come out of this debate, because it appears that hon. and right hon. Gentlemen opposite feel that the rates of interest are not in line with the rates of interest of other industries of this kind in the hands of private enterprise.

Mr. Paget: But would the hon. Gentleman not agree that it is shown that by this transaction about £1 million a year which would otherwise remain in the steel industry goes out of it and into the pockets of people who are not doing anything about making the steel? That being the admitted position, surely the hon. Gentleman has to show that there is some advantage to the steel industry for that happening?

Mr. Roberts: I do not want to go into that today. We have debated for days whether there is or is not an advantage in going from nationalisation into the freer world. I do not think Mr. Speaker would want us at this stage to go into that again. What I am trying to pinpoint is whether, admitting there is a difference in the financial rates, the Opposition are suggesting that the financial rates as put up by Her Majesty's Government are out of line with the ordinary financial rates for the same type of business. [HON. MEMBERS: "Yes."] Well, nobody has made that point specifically. We have had only tentative suggestions by the previous

speaker. In fact, the hon. and learned Member for Kettering (Mr. Mitchison) said that they were at about the right market figure. I made a note of that. I have been listening throughout the debate to hear whether that was one of the charges which would be levelled against Her Majesty's Government. If it is, let us hear it now so that it can be answered by my hon. Friends, but I do not think it could be made properly or substantiated by hon. Members opposite.
In the short time left. I want to say that I was shocked—in fact it brought me to my feet—when the hon. Member for Attercliffe, in trying to make his case, said that gambling on the Stock Exchange would influence the great productivity of this industry. That is absolute nonsense. Incidentally, I think the hon. Gentleman overstated his case and thereby spoiled it. No good and self-respecting company should worry about whether its shares go up 6d. or down 6d. at one time or another, nor does it do so. It is the object of a properly-run company to run its business efficiently in order to see that the workpeople and managers work together to get the best output and the best return for all concerned. For the hon. Gentleman to suggest that this will be influenced by differences in the price of the shares on the London Stock Exchange was to go much too far.
I end by asking the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) a question which I have asked him before but which he has not yet answered. It has been suggested from his side of the House today that if we get into a time of difficulty in selling steel we may be faced with unemployment under this organisation. In those circumstances, how does the right hon. Gentleman think that nationalisation would help the workers or would help the industry faced without side competition? We have here taken a step which we believe in the long run will benefit the industry far more than the amount of money which the hon. and learned Member for Northampton was discussing. The benefit to the industry and to those working in it, the benefit incidentally to Sheffield itself, will be far greater under this system than it could be under a system of nationalisation.

2.56 p.m.

Mr. Wilfred Fienburgh: Even though the hon. Gentleman the Member for Heeley (Mr. P. Roberts) was not impressed by the weight of the attack on the denationalisation terms from this side of the House, we must say that we arc entirely unimpressed by the weight and length and tedium of the defence which has come from the other side of the House. In his defence of the payment of hundreds of thousands of pounds more from the steel industry into the pockets of shareholders by way of dividends, the hon. Gentleman retreated into the kind of mysticism which we had so often during the Second Reading and Committee stages of the Bill of which this debate is the outcome.
The hon. Gentleman said we must accept, because he believed it to be so, that in some incredible way the same managers, the same technicians and, as to 90 per cent., the same boards of directors will give greater effort, and that this will result in greater productivity, better results and higher profitability because the shares will now be held by a group of anonymous individuals. Frankly that is not an argument, that is mysticism, and we cannot accept it as a serious defence of the position.
I do not want to waste time on the inordinately lengthy speech which we endured from the hon. Member for Kidderminster (Mr. Nabarro), apart from saying that in choosing the hon. Gentleman to undertake the task of keeping off the Floor of this House the Motion on officers' pensions, the Government chose a man well fitted for what must have been a distasteful task. I prefer to turn to the hon. Gentleman the Financial Secretary to the Treasury, whom we are glad to see opposite us again in this debate, because I wish to draw his attention to some words he uttered in the previous debates upon the denationalisation of the steel industry in this House. I shall not ask him to eat his words. That would be indelicate. I shall not ask him to digest his words. That would be impossible. No one, not even their author, could digest the magnificent prolixity of his own periods. But I draw attention to them.
We made several charges to the Financial Secretary when we were debating the Section of the Act which deals with the sale of these assets. First of all, we said

that they were very likely to be sold at knockdown prices. There, I must admit, in our naivety, we made a mistake. In terms of actual cash, I agree with the hon. Member for Heeley that they have not been sold at knockdown prices. By a certain amount of juggling with cumulative preference shares, the Government have even shown a small profit on this transaction. In making this charge we were naive, and we did not quite appreciate the length of financial chicanery to which the Government and the Agency were prepared to go in floating this issue.

Mr. Summers: Is the hon. Gentleman contradicting the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss)—I think it was—who said that the Opposition were in no way challenging the methods employed by the Agency? What the hon. Gentleman is just saying is at variance with that.

Mr. Fienburgh: I am making a charge against the Government. The Agency itself, it is quite clear, is a tool of the Government. It has a job to do, and it is doing it to the best of its ability. It is an unpleasant task. The methods by which it is doing it are dictated more by the Government than by the gentleman in the Agency itself, who are not here to defend themselves. I am attacking the Financial Secretary. If he does manage to break away from the prepared brief he has shown himself so anxious to protect during this debate by constant interventions on points of order, I may get an answer to some of the charges I wish to make.
The financial chicanery to which we refer was brought out very cogently by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), who pointed out that included in these terms was the raising of £10 million of debentures by the Agency for the benefit of United Steel which looks, at a first assessment of the prospectus, far in excess of the actual cash required for development in the period between now and 1955. The provision of this large amount of money, upon call between now and 1955, is without any doubt a safeguard, a reserve. a background against which the price of the ordinary shares can be adjusted. In fact, shareholders in paying for ordinary shares are assured automatically that they are going to obtain increased profitability in the industry, and that that is


going to be provided by the Treasury through the Agency.
The reason they have been able to extract a higher price is this. We still stick to the point we have made all along, in spite of the intervention of the hon. Gentleman the Member for Heeley, and that is, broadly speaking, that the yield offered by these terms is somewhat higher, about ¾ per cent. higher, than the yield of equivalent industrial shares. At the moment there are no precise equivalents because there are no steel shares. But taking similar industries equally susceptible to cyclical influences, equally susceptible to depression, and equally susceptible to decline in armaments orders, by the nearest possible parallel, we can say that the yield on these shares is from 1 ½ per cent. to I¾ per cent. higher than the yields of equivalent shares.

Mr. P. Roberts: Can the hon. Gentleman substantiate that?

Mr. Fienburgh: Yes. It has been in all the papers—"The Times," the "Economist," the "Financial Times." It has been in leaders, in the financial newspapers, in City comments. If the hon. Gentleman has managed not to see it during the past two weeks, obviously he is guided in his reading more by political motivation than by any desire to acquire knowledge.
A second charge that we made in Committee on the Bill was that we suggested. drawing our information from various reports in the financial newspapers, that it might be the purpose of the Agency to construct a very highly-geared capital structure for this industry; in other words, that it would so reconstruct the capital of the industry as to leave it with a fairly small proportion of ordinary shares, a fairly large proportion of preference shares, and a large load of debentures.
The general thesis in the financial Press was that the Government were very anxious to sell this industry to prove their political faith. Knowing that, believing that the public generally were not anxious to take the full load of this industry, various responsible financial critics suggested that the way. out of this dilemma was to create only a small pro-

portion of ordinary shares, an enormous load of debt, and to place the load of debt on the taxpayers through the Agency. When we suggested this, drawing, as I said, on the financial newspapers, the Financial Secretary to the Treasury said:
It is certain that in general it is unlikely that it would be thought either desirable or necessary to arrange so highly geared a structure…"—OFFICIAL REPORT, 23 rd February, 1953; Vol. 511. c. 1790.]
In fact we have seen the emergence of a very highly-geared capital structure, with £14 million equity capital and £19 million share and loan capital. That is not an enormously highly-geared structure, but it is a significantly more highly geared structure than the industry had when it was in private hands previously before nationalisation, when the proportions were practically precisely reversed.
In those days, the ordinary equity capital stood at about 65 per cent. of the total and the preference capital at about 35 per cent. So we are now left with a position, which is the substance of our third major charge against the Government on this issue, whereby the Agency, as the representative of the taxpayer, is left holding the greater proportion of the total capital of this company in the form of non-voting stock. In other words, the taxpayer is at the moment holding the preference shares, the redeemable cumulative preference shares and the £10 million debenture issue, none of which carries any voting rights unless there is a failure to produce the preference dividends.
I know that in the course of the next few months the Agency may unload some of the preference shares or the redeemable cumulative preference shares, but it still leaves, at the moment at any rate, and possibly for some time to come, a situation in which something like 60 per cent. of the capital of the company is being held by the Agency on behalf of the community at large.
We suggested that this might happen, but the Financial Secretary knew better and said that it could not possibly happen. He said, on 23rd February:
I said before, and I say again, that in general there is no intention of disposing of small but controlling packets of equity capital, leaving the Agency with a large block of loan capital.


To make the point even clearer, the Financial Secretary repeated:
There is no such intention."—OFFICIAL REPORT, 23rd February, 1953; Vol. 511, c. 1798.]
The hon. Gentleman's intentions may have been immaculate and honourable but his execution is deplorable, because we are left with precisely the situation which we foretold. It is a situation which. I feel, is making an absolute and utter farce of any protestation that this industry has now been returned to private enterprise. It has been returned to private control, and that is the significant difference.

Mr. Norman Smith: Hear, hear.

Mr. Fienburgh: The Government have constructed a facade. They have, as it were, built the outer framework of a racing motor car. They have put the steering wheel in the hands of a small group of fairly large shareholders—because there will be emerging fairly soon an identifiable small group of major shareholders holding the equity capital: but the motor is being provided by the taxpayers in the form of the holding which the country has in issues which bear no control, no voting rights and no power to direct the course of this industry—this motor car, or whatever the analogy might be.
That is not private enterprise; it is the usual activity of this Government. It is trying to get the best of both worlds, the best of both worlds meaning control and a higher yield to private industry, with a substantial proportion of the risk-bearing and of the motive power for the industry coming from the public purse. In that way it is just like all the other mock denationalisations and mock returns to private enterprise which we have had. After an original attempt to sell lorries back to the road haulage industry, the Government had to alter the whole basis of their hire-purchase regulations specially to make sure that the banks could lend money to private enterprise so that it could buy back the lorries. That, again, was a sham, a piece of trickery. It gave preferential treatment to one section of the hire-purchasing public, aimed at proving a part of the Government's political faith. This present instance is a similar tactic on similar lines.
We suggested that under the Government's proposals the Agency would in

effect turn itself into a money lending agency, lending taxpayers' money to the privately-controlled, but not privately-owned, steel industry. Again the Financial Secretary to the Treasury told us that we were talking nonsense. I am about to quote again from the Official Report of the same day. It was a very good day for the Financial Secretary. He was up and down like a jack-in-the-box the whole day. We managed to get these nuggets out of the incredible word-age which he put across in that day. He said:
It is equally not the intention…that the Agency should be a general moneylending Agency."—OFFICIAL REPORT, 23rd February, 1953; Vol. 511, c. 1841–2.]
But that is what has happened. In the very first of these issues the Agency has become a general moneylending agency. It is lending, without control, £10 million, which has helped to adjust the capital structure of the industry, which has admittedly helped the Government to get a slightly higher price for the shares—£10 million, not all of which has been called up; 23 per cent. has been and the rest will be called up between now and 1955. That is the basis of our complaint upon this issue.
We now see the ordinary shares at a slight discount, and the reason is possibly twofold. The first, as one of my hon. Friends pointed out, is that some speculators jumped in and jumped out again when they looked at the inflated capital structure of this industry. Secondly, as we look at the reports which are coming from Europe of the price-cutting war which is emerging on the Continent, although the Schuman plan has been established, and when we look at the enormous expansion and development in the steel industry elsewhere, it becomes clear to the ordinary small private investor that he has no place in such a highly cyclical industry as the steel industry.
Already the shares are at a discount. As time goes on, I feel that they will go to an even lower level. [HON. MEMBERS: "Oh."] I am contradicting my hon. Friends in this; it is my opinion. We have had enough contradictions on the opposite side of the House from one Member to the other. They were united only in an almost unanimous desire that the hon. Member for Kidderminster should sit down at various stages of the debate.
I feel that the discount is likely to increase because the investing public will realise, as we pointed out, that this industry, basic, cyclical, subject to all the workings and tremors of the world economy, is practically the first industry to be affected and is not an industry in which economically the private investor has either the right of control or the possibility of long-term profits. That further sustains our view that this industry must be returned to public ownership.
The last point I should like to register, though it may not meet with the agreement of all my hon. Friends, is that when we re-nationalise this industry we must, in calculating the terms which we shall pay on re-nationalisation, take account of the totally wasteful and extravagant expenditure of, so far, £500,000 in the flotation of this stock. That is a figure which, in my view, must be taken into account when we fulfil our pledge to re-nationalise this industry.

3.13 p.m.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): This is a Private Member's Motion, but it is the convention of the House that someone generally speaks from this Box during the course of such debates. As this Private Member's Motion has been, in certain of its aspects, mainly devoted to criticisms of Government policy, which I understand are to be officially reinforced from the Opposition Front Bench in a few minutes, it would be perhaps convenient if I said a word or two at this stage.
It has been a peculiar debate. The hon. Member for Attercliffe (Mr. J. Hynd) and the hon. Member for Swansea, East (Mr. Mort), who seconded the Motion, devoted the greater part of their speeches, not to any detailed analysis of the terms on which we have so far disposed of steel companies but to what I hope I may without discourtesy describe as a general grumble about denationalisation. Indeed, the hon. Member for Swansea, East, for whom I personally have a very high regard, devoted almost his whole speech to saying that his constituents did not like denationalisation.
It is only in the concluding speeches of the debate that to some extent the hon.

Member for Sheffield, Park (Mr. Mulley), and to a lesser extent the hon. Member for Islington, North (Mr. Fienburgh) have sought to direct any criticisms on the subject of what I understood to be the subject matter of this Motion
the circumstances, terms and conditions of the sale of the securities….
I do not propose—indeed if I did I should be ruled out of order—to debate the broad issue of nationalisation or denationalisation. Suffice to say that, after prolonged public discussion inside and outside this House, the electorate of this country gave us a clear and specific mandate to denationalise this industry. In execution of that mandate, the Iron and Steel Act, 1953, is on the Statute Book.
The matter has been sufficiently argued already, but I hope I can mention this fact, if only to ensure that no hon. Member opposite or anyone outside should think that anyone on this side of the House would have the slightest difficulty in sustaining the already successful argument, that it is a good thing that the steel industry is to be denationalised.
So logically we come to this. Granted for the purposes of this debate that denationalisation is a settled issue, we then consider whether, even at this early stage of denationalisation, the particular arrangements so far made for carrying out the process are or are not satisfactory. That, of course, does not involve an argument on the elementary proposition that the yield of industrials is higher than the yield of Government securities. It would indeed be an odd reflection on the national credit of this country were that not so. It would mean, in fact, that a Government guarantee did not appear in the eyes of the country to have any value. But we need not concern ourselves with that issue. It is accepted that on all good industrial shares the yield has to be higher than on Government stock.

Mr. J. Hynd: Is the hon. Gentleman now saying that the putting of stocks on an industrial basis increases the risk to the industry?

Mr. Boyd-Carpenter: If the hon. Gentleman were following my argument he would realise that that is the point that I am on, and if he will allow me to develop that argument I have no doubt that I shall be able to satisfy him. Anyone who looks at the Stock Exchange list


of securities backed by a Government guarantee will see that they have a lower yield than the highest industrial shares. That is beyond dispute.
The hon. Member for Attercliffe then went on with an argument the logical conclusion of which was that not only this industry but all industries should be nationalised and should, therefore, enjoy the benefits of Government guarantees on their borrowings. As I understand it, though there are various disputations and arguments inside the party opposite, and as yet a final policy has not emerged, and though there have been many testimonies of what is the policy of the party opposite, nonetheless I do not think that that is their policy. But the hon. Member must face up to this, that the argument which he put forward, and which is based on the differential between gilt edged and industrial rates, is an argument which has for its logical conclusion the nationalisation of all industry, and that is something which goes far beyond the industry with which we are concerned today.
I should like, before dealing with the broad question, to get out of the way a small point raised by the hon. Member for Sheffield, Park. He referred, as did his hon. Friend the Member for Islington, North to the fact that the equities of the United Steel Companies were disposed of while the prior charges were retained. The hon. Member asked me, in terms, whether the intention to dispose of the prior charges had been announced prior to the sale of the ordinaries. I have in my hand a document which I obtained to reinforce my own clear recollection. It is a copy of the Press statement issued by the Iron and Steel Holding and Realisation Agency on 16th October, in which the intention to make the ordinary issue was announced. It concludes with the words:
In due course the Agency intend to dispose of their holdings of debenture stock and preference shares.
Therefore, the answer to the hon. Gentleman is, "Yes." The hon. Member for Islington, North sought to develop an argument, based on the fact that the equities had been disposed of, to suggest that there was some disparity between that state of affairs and the indications of policy which I and my hon. Friends gave during the debate on the Bill. Nobody said during the course of those

debates that we would dispose of all the shares, especially of these great companies, in one operation.
This operation which has now taken place was a very large one involving about £17 million. It is extremely unreasonable of the hon. Gentleman to suggest that in conducting that operation it was necessary to add another very large sum to it. The hon. Gentleman must know perfectly well that an issue of this size involves its problems. He must leave it to the discretion and knowledge of those undertaking the operation to conduct it in the way most beneficial to the taxpayer. It really is unreasonable when we have undertaken this large operation to challenge us because at the same time we have not so far disposed of the prior charges.
The hon. Member for Sheffield, Park went even further in ingenuousness. He asked me to disclose at what price we propose to offer the prior charges. I am sure that he would like to know, and so would a lot of other people. I have not the remotest intention of telling him, for reasons which the hon. Gentleman must appreciate, and for reasons which anyone with any concern for the interests of the taxpayer will appreciate.

Mr. Mulley: Since the hon. Gentleman has been good enough to refer to what I said, may I intervene? The hon. Gentleman will probably agree that we can only assess the proper value of the equity if we know what return is likely to be made for prior charges. Although I agree about the Press statement, there was no announcement in the offer for sale that these cumulative shares and debentures were shortly to be put to public offer. I am sure that many shareholders of United Steel do not know yet.

Mr. Boyd-Carpenter: It has been announced in the Press, and frankly anybody who does not know has only himself to blame. On the first point, I quite agree that until we have dealt with the prior charges, it is impossible to make a complete and final estimate of the degree of success we have achieved in the marketing of this company. But it was not I who tabled this Motion at this stage of the proceedings for debate today. We have to deal with it because the hon. Member for Attercliffe saw fit to table the Motion.
I agree, and I call in aid the fact that nobody can form a sensible view of the final result, or give a final verdict on the disposal of this company until the operation is complete and until we know the prices. That, of course, is the difficulty which not only faces me but faces hon. Gentlemen opposite in any criticisms they may be good enough to make. The issue seems to be perfectly plain. It is whether in the circumstances as they have so far developed—at this early stage—we have conducted the operations successfully.
It calls for comment that although two Treasury minutes have been laid relating to the disposal of two other steel companies, there has been no criticism whatever in this debate of those arrangements. Therefore, I must take it that the combined ingenuity of hon. Gentlemen opposite has failed to find even a superficial criticism to make of them. I confine my-felt, therefore, to the process which took place in respect of the public issue of the United Steel ordinary shares. This is a matter of substantial public importance with substantial sums of public money involved. It might help the House if I explain the way in which we are conducting this process.
Let me first deal with one somewhat irrelevant issue to which some Members opposite attached importance—the actual expense of the issue. It is, of course, a fact that both nationalisation and denationalisation involve certain incidental expenses. I do not think there is any great argument to be founded on that fact. Certainly, if there is any argument in the case of denationalisation to be founded on it, if there be objection to the incidental expenses of this transfer of ownership of a great industry, obviously those who started the process of nationalisation should have the first responsibility laid on them. As our French friends put it,…que Messieurs les assassins commencent. I do not think that there is very much in that argument.
Let me come to the method we adopted. I start with the objectives. We desired to carry out these transactions in an orderly fashion. That, as I have said more than once from this Box, was the desire to secure a fair price for the nation for a piece of what is, at the

moment, the property of the nation. During the course of this debate I was not at all clear where the weight of criticism of the benches opposite lay. The hon. Member for Islington, North expressed some anxiety about the interests of the taxpayer, that is to say that we were not asking enough. Other hon. Members dilated on the burdens laid on the industry. They suggested that we were asking too much.
It seems to me that the criticism made of this actual transaction are neatly balanced out between those who seek to criticise by saying that the price was too high and those who seek to criticise by saying that the price was too low. I will come to the considerations on fixing the price in a moment. We are determined to secure a proper price for this piece of national property, and we shall not yield to the blandishments of anyone who wishes to secure it at a price less than a fair price. We do not intend to proceed on any other basis.
The marketing of large quantities of stocks and shares, as the right hon. Gentleman the Member for Vauxhall(Mr. G. R. Strauss) knows, is a delicate job, requiring professional knowledge and experience. This we required not only for the assessment of what is the right price but also the right time. May I say on the question of the right price that there is probably no hon. Member of this House who has ever tried to sell something and succeeded in selling it who has not thought afterwards, "Could not I have got a bit higher price if I had asked for it?" Equally, there is no hon. Member who has failed to sell something who has not thought that he has made a mistake in asking too high a price. It is a matter which, in the ultimate analysis, requires trained judgment and experience combined, of course, with precise statistical analysis.
We have because of that sought the advice, as the House knows, of a distinguished body of men, and I am sure that hon. Members, whatever they think about denationalisation or nationalisation, regard it as singular good fortune for the country that we should have secured such very able and experienced men to advise us on the Iron and Steel Realisation Agency. In Sir John Morrison we have a chartered accountant of immense experience both in private


life and in most distinguished Government service as Director-General of Finance and Contracts of the Ministry of Supply for three years during the war; Sir Oliver Franks whose name does not need any commendation from me; Sir John Green who has given a lifetime to the steel industry; Sir Thomas Chadwick, Accountant of Her Majesty's Treasury until this summer; Mr. Wishaw, a distinguished solicitor: and Mr. A. C. Bull, formerly a senior official of the Bank of England.
We took that step to ensure that we should have the best possible advice. In view of what has been said in this debate, I repeat that the full responsibility for these decisions rests, not on our distinguished advisers, but on my right hon. Friend and upon Her Majesty's Government. I think that the House in considering the conduct of the preparation of these matters will think it material and of importance that we should have made available to ourselves in addition to the normal machinery of the Government so much expert advice.
That is the position, and we come then to this issue. After an issue of this kind has been made, we can always say that we could have got more or less, but it is of some interest that the issue, within a couple of days, went to a premium. of 4d. and afterwards fell back to a small discount of 6d., at which it stood, I understand, at closing time last night. Again, that would seem to indicate that, taking the view that it is our duty to get the best price we can, these two figures of a small initial premium and a small subsequent discount indicate that we were pretty right in the price on which we decided. Once again, to use an artillery metaphor, it gives a good bracket, and I think it is an indication that, although we can argue on minor fractions, it was on the whole an accurate figure.
Some hon. Members have sought to make comparisons between the yield of these shares and other industrials. That is an interesting discussion, and it is made the more interesting if we compare the yield of certain industrials in general with that of steel shares in the United States. If hon. Members care to consult the "Financial Times" figures they will see clearly enough that the yield of the Bethlehem Steel Corporation shares is 7·4 per cent., that of United States Steel 7·25

per cent., compared with the 7·2 per cent. of United Steel. Contrast 5·3 per cent. for Standard Oil and 5·5 per cent. for Woolworths, to take two other very well known American securities.
I am not seeking to base any very profound argument on that, because it is a fact that there are conditions inside a country which affect the price which its securities command, but it does at least indicate that there is nothing which could be attributed to the sinister machinations of the British Government if a differential of that sort developed. No process of denationalisation has been necessary in respect of the United States steel industry, and the figures are perhaps an indication that the somewhat sinister suggestions which seem to have got into the minds of one or two hon. Members opposite are completely unreal.
I can only complete my account of the process by saying that, as the House knows, in response to an Amendment to which I agreed during the debates on the Iron and Steel Bill, the final stage of the process is the laying of a Treasury Minute disclosing what has happened in respect of a substantial transaction. These Minutes were laid in respect of the Round Oak and Templeborough steel companies.
That is the process: the independent advice of experienced men—experienced in this difficult business of the marketing of securities—tendered to my right hon. Friend, who accepts full responsibility to the House, the procedure of laying a Treasury Minute, and here we have a procedure which I should have thought was about as open, clear and above board as it is possible for the we of man to devise. That was the process which was applied in this particular case.
I do not think I need say very much more on the question of the precise price. In our judgment, with all the sources of information that are available to us, that was the best price we could get, and subsequent dealings in these very securities have shown that we were pretty close to the right figure, if not, as I am bound to say seems the case, on the absolutely exact figure which it would be right to demand.
A good deal has been said about the effect of all this on the industry and upon its efficiency, and a good deal of


what was said was extremely one-sided. I have already dealt with the point that the yield of industrials is, and is expected to be, higher than of gilt edged, and I hope I have dealt with the logical conclusions to which arguments based upon these points appear to lead those who indulge in them. The issue is a good deal wider than a mere comparison of rates of interest or dividend. The object of the proceedings is to secure the valuable process to the industry as a whole of a return to private enterprise.
Much has been said to suggest that such a return would have unhappy consequences to the industry, in that it will produce bad industrial relations, involve hardship to the consumer and, as the Motion suggests, will stunt development. I need only call in aid the whole process leading up to nationalisation and the fact that this is an industry with a very happy record in industrial relations. Prior to nationalisation the industry put forward schemes, and proceeded to carry out enormous development plans, the benefits of which we are now beginning to reap. It has not suffered when under private enterprise to any degree from the evils which hon. Members opposite now forecast will fall upon it when it returns to private enterprise. The recent history of the industry enables us to look to its future with very considerable confidence. I hope that nothing that has been said will be taken seriously outside to reflect upon the future of this great industry during the new phase which is opening for it.
This project is an essential preliminary to a process which we believe to be in the interests of the industry and of all who work in it, and to the nation. We are strengthened in that belief by the fact that our fellow-countrymen have given us a mandate to carry out this freeing of the industry, and incidentally, the processes which have to be carried out to implement that decision. These proposals are part of those processes, and I have described to the House how we shall carry them out. I hope that I have made clear our attitude and the spirit in which we are working. I hope that we shall not allow niggling points of prejudice or procedure to mar the orderly development of a great industry.

3.39 p.m.

Mr. G. R. Strauss: My hon. Friend the Member for Attercliffe (Mr. J. Hynd) has done the House and the country a useful service in calling attention to what he believes, and I think all of us on these benches believe, are the serious and unfavourable consequences of this first big denationalisation scheme for which the Government are responsible.
The Financial Secretary has told us that this is one of the processes—I think his expression was "incidental processes"—in carrying out the decision of Parliament to denationalise the industry. He is quite correct, but no one can complain if we call attention to these processes and point out how those processes, which, added together, will cover the whole industry, are provably damaging the iron and steel industry and the country.
It is all very well for the Financial Secretary to talk about niggling points of dispute—I think those were his words—and to suggest that by putting the Motion forward we are harming the industry. That, I suggest, is nonsense. We believe that these are fundamental points and that the harm done to the industry will be serious.
We discussed these matters broadly when the denationalisation Bill was before the House, but it was impossible at that stage to discuss matters which have subsequently been revealed by the prospectus of the United Steel Companies. Now that these details have been revealed and everybody knows what it means in financial terms to sell these iron and steel companies to private owners, it is our duty to the public, in spite of the fact that Parliament has agreed to the general principle of denationalisation, to show how the consequences of denationalisation are working out.
First, I want to take up the Financial Secretary on his description, which was extraordinary and in my submission to the House bore little relationship to the truth, of what happens when the Treasury decides that a certain iron and steel company is to be sold to the public. It is really a complete myth to suppose that either the Treasury or the Iron and Steel Holding and Realisation Agency decide that they are going to sell these shares to the public at such and such a price,


and give orders to brokers and other people concerned to make the issue.
Nothing of the sort happens. Let the House and everybody realise that the Government and the Iron and Steel Holding and Realisation Agency are not free agents in this matter. They are the victims of a powerful monopoly, and what that monopoly of city interests says, goes.
Ordinarily, when a company wants to make a public issue, it goes to competing groups of people who deal with these matters and asks them the terms on which they will underwrite the issue. It may get different terms quoted. Here nothing of the sort happens. Here a powerful group of bankers—I am not saying a word against them; they are doing their job—and issuing houses have got together as a consortium. That consortium says to the Government, "We will underwrite this issue on these terms and no other." They say to the Iron and Steel Agency, "If you want to issue 15 million shares, these are the only terms on which we will underwrite the issue, and on which, therefore, they can be issued to the public." They say, "These are the terms which we lay down," and all that the Agency can do is to go to the Treasury and say, "Will you accept this or not?"
As the Agency and the Treasury are under a statutory and political obligation to sell off these companies, they have, in fact, to accept the terms which this monopoly has dictated to them. I assure the hon. Gentleman that I do know about this, and know what happens under these conditions. It could not happen in any other way because the consortium who have underwritten these shares must lay down the terms on which they will underwrite them.

Mr. Stevens: Would the right hon. Gentleman suggest that the present free market price at which these shares are changing hands indicates that the advice given by the consortium was good or bad?

Mr. Strauss: That was not my argument. I am not arguing that the price was either too high or too low. I am arguing what the consequence of this issue will be as stated in the terms of the Motion and as put forward by my hon. Friends. My argument at the moment

is that this idea that the Treasury decides the terms of the issue on the advice given by Sir John Morrison and other distinguished men is nonsense. All that Sir John Morrison is, in this respect, is an errand boy between the consortium and the Treasury. That is not Sir John's fault. I know Sir John Morrison and have the highest respect for him, and for the other people on the Agency, but his position is such that all he can do is to convey the message from the consortium to the Treasury. They say that they are prepared to make an issue and underwrite on these terms and on no others. He has to ask the Treasury if it is prepared to agree or not, and the Treasury has in practice to say it is.

Mr. Boyd-Carpenter: Before making remarks like that about a distinguished public figure who has no chance of replying, will the right hon. Gentleman say what his sources of information are?

Mr. Strauss: I know exactly what happens when this sort of thing is done, and I suggest to any Member of the House who knows about public issues that, in fact, it can be done in no other way. In this particular set-up, where there is one consortium, a monopoly, and no one else able or willing to underwrite such a large amount of shares, there is, in fact, only one way it can be done, and, this is how it was done

Mr. Boyd-Carpenter: The right hon. Gentleman has no knowledge of it whatever.

Mr. Strauss: I maintain that it is so. and, indeed, know it is so.
Let me go to the other major points which have been raised in this debate, and to the main burden of my hon. Friend who has sought, in bringing this Motion before the House, to expose these facts. That is his intention. He wants the House and the country to know about it. This issue may have been financially on the wrong terms or on the right terms, and it is easy to argue that the price might have been higher or lower. That is not our case. But what we say is surely indisputable. It is that from the price at which these shares were issued—and they must have been issued at somewhere about this figure—it can be shown that there is going to be in future a serious burden on the iron and


steel industry, on the workers in that industry, and on the community in general, which was not there before.
Anyone can calculate the additional amount which the United Steel Companies are to pay out to private shareholders in the future, on the assumption that, as the prospectus states, the company is going to progress in prosperity and that things are going to be good for them. The hon. Member for Aylesbury (Mr. Summers) said that although they are to get 7¾ per cent. now, it might be that they would get nothing in a few years' time; but on the other hand instead of getting 1¼ per cent. now, they might later be getting 10¼ per cent.
All we know is that the directors, in their prospectus, made a very optimistic statement, and showed that, after various calculations, there was more than sufficient left to make a 9 per cent. divident—on the basis of a £1 share—with a substantial margin left over. They spoke very favourably indeed about the prospects, and talked about the good position of the company, which was likely to maintain its progress.
I therefore think that everyone, potential investors and Members of this House, are likely to assume, that, although no one can predict the future with certainty, it is probable, and it is so believed by the directors, that they will continue to pay round about the present suggested dividend of 9 per cent. on £1, or 7¼ per cent. on 25s., for a long time to come. And there is just as much probability of that dividend going up as there is of it going down. We are therefore entitled to assume the amount to be paid out by the industry to private shareholders to be 7¼ per cent.

Mr. Summers: Do I understand that the right hon. Gentleman is really saying that it requires a Motion of this kind, and a debate of this length, in order to demonstrate that an industry in the hands of private enterprise, normally carrying a high rate of interest, will have more to pay out than under Government ownership?

Mr. Strauss: I think it is important to demonstrate what the consequences are going to be. It is a matter which many people in the country do not realise.

We did not talk about that during the previous debates because we had not the facts and figures, but we have them now. I can understand the hon. Member for Aylesbury (Mr. Summers) not wishing to talk about it—I can quite understand that.
The calculations show that there will be paid out of the United Steel Companies' profits something like £½ million a year which previously was not being paid out of the profits of that company. Before it was only liable to 3½ per cent. payable to the British Iron and Steel Corporation. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) puts the figure at £1 million, and probably he is correct, but I am conservative in these matters and I say that at least i½ million additional burden is being put on these companies in paying dividends to outside shareholders. My hon. and learned Friend is probably more accurate than I am.
As this company represents something like 10 per cent. of the total iron and steel companies, it is a true generalisation to say that if we multiply this £½ million by 10 we can get the figure of payments to outside shareholders which will take effect when the whole of the iron and steel industry is sold. Therefore, as I said in a supplementary question a little time ago, it is inescapable that at least £5 million a year is going to be paid out of this industry to large numbers of private shareholders, which previously was retained in the industry for one purpose or another. That is a serious matter.
The hon. Member for Kidderminster (Mr. Nabarro) said a number of things in the course of his speech. I think they were all inaccurate, but I only want to take him up on one because this is relevant to my case. He said, "What difference will it make to the price of steel commodities whether the interest is 7¼per cent. or 3½ per cent.? It will not affect their price much." I do not think that is true. If my calculation is correct—and no-one has denied it—that the total difference is going to be at least £5 million—and it will probably be more like £10 million—paid out of the industry as a result of denationalisation, I suggest that the difference to our export trade may be considerable. We


have a valuable export trade in steel products—something between 1 million and 2 million tons a year—and if we can meet competition by reducing the price of our products by £5 million if necessary, it may mean all the difference between the survival of that export trade and its loss.

Mr. Nabarro: The right hon. Gentleman said that many of the things I said in my speech were inaccurate. [HON. MEMBERS: "All of them."] Very well, he said all of them were inaccurate. He may disagree with the deductions that I drew from them, but the figures I employed were quite irrefutable, and if he wants to know the source of my information, it is the British Iron and Steel Federation.

Mr. Strauss: Figures can be used in any way one likes. I am not saying the figures themselves were false, but the hon. Member put them before the House in such a way as to try to lead the House to draw false conclusions from them.

Mr. Nabarro: Certainly not.

Mr. Strauss: A difference of £5 million a year may have a considerable effect on maintaining our export trade in steel. It is all very well for the hon. Member to say that our prices are cheaper than those of our competitors in other countries, but the fact is that in the export trade the steel makers in this country are exceedingly worried at the moment because of the competition from other countries.
Another way in which the £5 million could be used might be in developments and extensions of the steel industry. This would be an exceedingly important way of using the money, and would reduce the need for raising fresh money from outside and adding to the financial burden of the steel industry. Another way would be to improve the conditions of those working in the industry, in housing, wages, hours and so on.
In whatever way we care to say this money could be used, the basic fact is that substantial sums of money are going to be paid out of the industry to private shareholders which otherwise would remain in the industry and be used for the benefit of that industry.
No one has suggested to us so far what benefit will accrue by having 52,000 shareholders who will get dividends on their

shares from the United Steel Companies. What contribution will they make? The theoretical basis of private enterprise and the theoretical defence of capitalism is that the shareholders control the company, can exert a considerable influence, can dismiss directors and can direct policy. That, again, is a myth which cannot have any truth in these circumstances.
Or is it really suggested that these 52,000 people will exert their influence on the policy of the board? If someone says "yes," I ask, should they do so? Is it not madness that they should do so? Of course it is. The fact is that these people will do nothing at all. They will not benefit the steel industry, they will not benefit the public. They are there as honest investors who hope to get rather more interest from the United Steel Companies than they would if they had invested in other sound industrial shares. That is their only position in the industry. Whatever may be said about the fairness or inevitability of paying a high rate of interest under conditions of denationalisation, those working in the industry will not consider it fair or reasonable.
Reference has been made by one or two hon. Members to what has been called a threat—the statement I made about the attitude of the Labour Party to compensation when the industry becomes nationalised again. As that has often been distorted, it is desirable at this stage to repeat exactly what I said and to explain what I meant, as it is only fair to investors in the United Steel Companies and in other companies which will be put on the market. I shall therefore read what I said:
Moreover, we say"—
I was not speaking personally, I was speaking for my colleagues as well as myself—
that, if all or any section of this industry is now to be handed over to private investors, when the time comes, as it inevitably will, to re-transfer the shareholdings to public ownership, those investors should be compensated on the principle that under no circumstances will the total compensation already paid out be increased.
Of course I was not referring there to any new capital which might be raised meanwhile. I went on:
It follows, amongst other things, that in any such compensation calculation full


account will be taken of any dividends which may have been distributed to stockholders in the intervening period over the 3½ per cent, provided by British Iron and Steel Stock."—OFFICIAL REPORT. 12th November, 1951; Vol. 493, c. 663–4.]
That still stands today. I did not put it forward as a threat. I put it forward because I thought it was fair that potential investors in the iron and steel industry should know the attitude of the Labour Party and what was likely to be their future policy. My hon. Friend has done a service in exposing these matters and pointing out some of the consequences of denationalisation which only now reveal themselves. I hope that when these facts are known, and realised, the hour may come nearer when the present Government will be swept out of office and the re-nationalisation process will start. I hope that the day will come nearer when this great iron and steel industry will be run, not for the benefit of 52,000 shareholders, but of 50 million British citizens.

Mr. J. Hynd: Mr. J. Hynd rose in his place and claimed to move, "That the Question be now put."

Question, "That the Question be now put," put, and negatived.

Question again proposed.

It being Four o'Clock, the debate stood adjourned.

Orders of the Day — RIGHTS OF ENTRY (GAS AND ELECTRICITY BOARDS) BILL

Read a Second time.

Committed to a Committee of the whole House.—[Miss Ward.]

Committee upon Friday, 29th January.

Orders of the Day — PRIVILEGES

Mr. Assheton discharged from the Committee of Privileges and Mr. Mc-Corquodale added.—[Mr. R. Thompson.]

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. R. Thompson.]

Orders of the Day — BUSINESS OF THE HOUSE

Mr. C. R. Attlee: May I ask the Leader of the House whether he has any statement to make about the business next week?

The Lord Privy Seal (Mr. Harry Crookshank): Yes, Sir. I am now able to inform the House of the business for Wednesday and Thursday of next week.
On Wednesday it is proposed to take the Opposition Motion of Censure on the Government in relation to African affairs.
On Thursday there will be a debate on the Bermuda Conference which will be opened by my right hon. Friend the Prime Minister.

Orders of the Day — HOSPITAL ACCOMMODATION, COVENTRY

4.3 p.m.

Miss Elaine Barton: There may be other areas with hospital problems just as urgent as those of Coventry, but I would say to the Minister that there are not many in a worse plight. I know the Minister believes, and it may be, that those areas being dealt with before our turn comes are in as bad a situation as we are. Quite honestly, I cannot believe that they are in a worse position. All that we are asking of the Minister today is a small first step to remove the most serious overcrowding in our hospitals.
Perhaps I might ask the Minister whether he is aware that Coventry has played a part in the defence and export programmes of the country which has been excelled by none. This has meant that the expansion of industry since the end of the war has been so great that we believe the Government should make a decisive effort to give us the means of having a decent civilised community. We have some of the finest new schools and some of the best designed new houses, but the hospital problem is quite incredible.
Since 1900 our population has increased by 200,000. During the last 20 years alone, 90,000 additional people have come to live in Coventry. That is the background to the problem. If one has a good case, no purpose is served by exaggeration, and I want quite simply to state the facts of the position in Coventry.
In 1938, the Coventry and Warwickshire Hospital had a bed accommodation of 347. This was made up of 307 on the central site in Stoney Stanton Road and 40 at a recovery unit at Keresley, a small village about three miles from the city centre and about three-quarters of a mile beyond the city boundary. In September, 1939, hospital extensions on the central site were completed. This meant that after we had allowed for a reduction in the bed complement because of overcrowding and sub-standard accommodation, the beds on the central site were increased to 410, which, together with the 40 beds in the recovery home at Keresley, gave a total bed complement under the administration of the Coventry and Warwickshire Hospital of 450 beds.
During the concentrated air attacks on Coventry in November, 1940, and April, 1941, practically the whole of that in-patient accommodation of 410 beds, plus the boiler house laundry and other accommodation, was destroyed. Immediate first-aid repairs were carried out, but the point which I underline first is that the only two wards which remained standing after the blitz are today still in their crude first-aid repaired state.
When the bombing occurred, the voluntary hospital raised an appeal fund and with the money erected air-raid shelter type wards, in associration with the recovery unit at Keresley. These wards, upon which the Ministry of Health, quite

rightly, permitted only limited expenditure, were intended solely to enable patients to be accommodated during the war under relatively safe conditions. The second point which I underline to the Minister is that these air-raid shelter type wards have had to serve the major needs of Coventry for the past 12 years.
I think the Minister knows that the overcrowding is severe. Wards that were designed to accommodate 32 beds now hold 44 and 45 patients. The medical ward caters for both male and female patients; both have to use the same ward conveniences. The male patients have to pass through the female ward. The ophthalmic unit was originally a chicken farm. This hutment was purchased in Norfolk, transported to Coventry, and erected by the hospital staff. The doctors tell me that it is structually dangerous owing to its heavy corrugated asbestos roof, while the possibility of fire and the risk to the ophthalmic patients is a constant source of anxiety to them.
The children's ward is also of air-raid shelter construction; and the tonsil unit was originally erected as a gas decontamination unit. It is into accommodation like this that, in 1952, 10,096 patients were admitted with, what I know the Minister would regard as particularly important, an average stay of 109 days. The average stay has been "bettered" this year, although I think that the Minister may perhaps agree with me that one can hardly call an increase in an already dangerously rapid turnover of patients a betterment; but if one can call it a betterment that in-patient stay has been reduced to 10·5 days.
I would emphasise from the doctors in Coventry that it is only by this excessive in-patient turnover that it has been possible to meet Coventry's demands and keep down the waiting lists. I would not say that, not would the doctors give me the information, unless we had something substantial on which to base it. The Minister will recall that we have already informed him that the average in-patient stay for the whole of the region is 15 days as compared with ours in Coventry of 10·5 days. Obviously, if the average regional figure had obtained in Coventry in the last two years alone we should have treated 6,000 fewer patients and the waiting lists would have increased accordingly.
What have we tried to do to help ourselves before coming here? Early in 1946, which I appreciate was before the present Minister took office, the then board of management of the Coventry and Warwickshire Hospital, after two years of careful study and planning, published proposals for the rebuilding of the hospital. Those proposals, as the Minister will know, included the erection of two new wards—in part-replacement of temporary accommodation at Keresley and in completion of the building scheme, the first section of which was completed in 1939—and the full reinstatement of the two damaged wards. This initial scheme, to cost about £250,000, was prepared and submitted to the Ministry.
Owing to the then shortage of building labour and materials it was indicated to the management committee that it would be necessary to submit more modified proposals. This was done, and in 1947 the then Minister of Health received a hospital deputation and authority was given for the first phase of the work to proceed. That included the reinstatement of a section of the out-patient department to provide a new out-patient casualty and accident unit, a new dispensary and other ancillary accommodation.
I have gone very carefully into this and so have the doctors, and I do not think that the Minister will disagree that the records would seem to show that approval of the work to proceed was given on the understanding that it would be phased. The hospital deputation in 1947 was quite willing to agree to this, fully understanding that the remainder of the scheme—embracing the new ward units and reinstatement of existing wards—would follow on consecutively. Nothing has been done in furtherance of the building of the ward units although more than six years have now elapsed since the reception of the deputation by the Minister.
What we are now asking for in Coventry is the immediate carrying out of phase three. I might make it quite clear that this demand for the carrying out of phase three now is quite independent of where any new hospital may be sited or when any new hospital may be built. We feel that the additional accommodation for which we are asking cannot wait any longer. We want to stress to the

Minister that the provision of new wards is a very great need, because quite obviously until additional accommodation is available existing buildings cannot be vacated to allow for their repair and renovation or to reduce overcrowding.
There is an urgent need for 150 to 200 additional beds to be provided quickly. I am informed, and I think it is true, that there are adequate steam and other services available on the Stoney Stanton Road central site. The hospital management committee, plus the regional board, are in agreement.
Most seriously, the third point I want to underline is that Coventry is in need. We believe that the situation is so serious that prompt and vigorous action by the Ministry is more than justified, even if it involves a departure from the normal routine in the financing of hospital projects.
I want to ask the Minister to consider other cities which have precedence over us. What other city in 1938 had a population of 220,000 and saw this increased by 1952 to 262,000; while at the same time in 1939 it had hospital bed accommodation for 450 and today has seen that reduced to 341? In other words, what other city has increased its population by 42,000 since 1938 and at the same time has had a decrease in hospital bed accommodation of nearly 25 per cent. or one-quarter?
What other city in 1948, at two major hospitals, had an in-patient turnover of 12,590 and in 1952 saw it increased to 17,119, an increase of 36 per cent. as against a decrease of 25 per cent. in the accommodation available? Lastly in this series of questions, what other city in 1948 had a waiting list of 2,277 which increased in 1952 to 2,539? I know the Minister would agree that that waiting list would have been greater if the average in-patient stay had been the same as in the region. So I am asking the Minister, what other city has had all these factors to contend with while suffering a 25 per cent. reduction in hospital bed accommodation?
We have taken every practical step to utilise to the best advantage the available hospital accommodation. Every effort has been made to maintain a hospital service for the city of Coventry. The Coventry and Warwickshire General Hospital is in my constituency. I know


it and have visited it. I know the staff and many of the patients there. I would say the result of the work of all these people to maintain a hospital service in the city of Coventry would have been outstanding in the terms of numbers of patients treated if conditions had been good. Under existing conditions I think that sufficient tribute cannot be paid to the hospital management committee, to the doctors and, above all, to the staffs of the hospitals, particularly the Coventry and Warwickshire Hospital.
I want to be fair. The Minister has been good enough to receive a deputation from Coventry. He listened to all we had to say, and it is our belief that we have his good will. We know that if there should be underspending in any of the regions in 1954, Coventry will have a priority claim on any money that is going. But even allowing for that, it is not enough. That is why I think today that I can quite reasonably on behalf of Coventry ask the Minister to take exceptional measures to give us more hospital wards, not in 1957 or later, but in 1954 at the latest.

4.20 p.m.

The Minister of Health (Mr. Iain Macleod): Had it not been for the good fortune, if that be the right word, of the hon. Lady the Member for Coventry, South (Miss Burton) in winning a place in the Adjournment ballot, I should have been concerned at this time with another hospital. I should have been at the opening of an out-patient department at Balham. But as the major interest in Balham, judging from the local papers and the national Press, appears to be whether a statue that is there should or should not wear a fig leaf, I am perhaps well employed in replying to the hon. Lady on this matter. Also, of course, I am very happy to do so, because the House of Commons comes first.
Whether we are Ministers or not, and on whichever side of the House we sit, we are all constituency Members. The hon. Lady—as hon. Members usually are, and quite properly on Adjournment Motions—is concerned with her own constituency of Coventry. I am a constituency Member, but in health matters I have the wider parish of the whole of England and Wales to consider. I can only consider the problems of Coventry not in isolation, but in relation to the

problems of every other area in the whole of those two countries. I have to look at the problems of South and North Wales, the very crowded Newcastle area, and the areas round Liverpool and Manchester, to mention only a few of those in desperate need of hospital accommodation.
The Birmingham Regional Board has a very difficult problem of priorities. It has to weigh the claims of Coventry with all the other claims of the cities, towns and districts which make up that most important area. It is important to make clear how capital expenditure in the National Health Service is financed in view of what the hon. Lady is asking me to do in the case of Coventry.
The provisional capital allocations for the next financial year, 1954–55, were notified to regional boards in July, 1953, subject to Government approval—and, indeed, subject always to Parliament ultimately voting the necessary money. The Birmingham Regional Hospital Board was allocated a sum of £625,000, which compares with £572,000 for the current financial year. There is a substantial increase, but the first principle, which is of great importance, is that it must be the duty of the regional board to decide how that money is to be spent, knowing the needs far better than the man in Whitehall can possibly know them.
I have always resolutely refused to take upon myself the onus of selecting projects as against other equally, or almost equally, desirable alternatives, so far as ordinary capital expenditure is concerned. I allocate the money that I can obtain from the Chancellor of the Exchequer—or almost all. with the exception I will come to in a moment—to the regional boards and the boards of governors of the teaching hospitals. A small reserve, but less in fact than goes to most individual regions, is kept back for any such emergency as a fire.
Then we come to the allocation which concerns us this afternoon and which the hon. Lady is asking me to use in this case. It will be clear from the figures I have given that some schemes are so vast in themselves that it would be unreasonable to expect a regional board to allocate money for these schemes within the total that is given to it. We are able, on the provisional estimates for next year,


to resume setting aside certain monies for large schemes. This is put in two parts. First, for the new large schemes and for the carry-over of the present large scheme programme, and secondly for the mental services, to which I have always attached the very greatest importance.
The essential question which the hon. Lady asked me was: Can phase three of this building be included next year? Let me say straightaway that, of course, there is much that is common ground between us. I agree that the hospital accommodation in Coventry is thoroughly unsatisfactory. Indeed, I have seen it myself. I have been around these wards to which reference has been made. I agree that the wards are overcrowded, and I know that there has been a large increase in population. I would be prepared to agree, too, that Coventry has a special claim in view of its position in the industrial and export market and also because of its suffering during the war.
I would add also that the fact that the accommodation in Coventry is deplorable does not mean—I should not like a wrong impression to go out from this House—that the standard of work being done is also poor. That is not so, as I know the hon. Lady will agree. I was very impressed indeed to see what splendid work is being done in what I frankly describe as thoroughly unsatisfactory conditions. I agree that large-scale hospital rebuilding in this area is required.
The problem then is where and when. The question where is one that has been a matter of dispute between the Regional Board and the Hospital Management Committee and to some extent my Department, under its successive Ministers, for some time. The alternatives are building on the Stoney Stanton Road site or building a new hospital on the perimeter.
It seems now to be agreed—and I hope it is, because I think it is important that we should have no more delay in these matters—that a new hospital ultimately will be built at I think Walsgrave, and that phase 3 should be completed as soon as may be on the Stoney Stanton Road site. I must be frank and give the answer to the hon. Lady which I think she knows already.
There was a deputation from the Hospital Management Committee and the

Regional Board to my officials about six weeks ago, and the hon. Lady brought personally a deputation of the local doctors to see me only a week or two ago. They asked essentially the same question and if there is any virtue in a thrice told tale, I am afraid that I must give the same answer. It is purely because of this overriding demand for priorities.
Frankly, Coventry stands very high on the list. I have said that it has not been possible to put it in the programme that I hope to carry out in the next financial year, but if the total available for hospital building for 1955–56 is not less than the amount contemplated for 1954–55, and I have no reason to expect that it will be, I hope to be able to finance it not only in that year but in later years from my central reserve, because the building and the completion of what is described as phase 3 of the Stoney Stanton Road site is too big a scheme to expect a region to carry out in the ordinary way.
The hon. Lady mentioned that I had given her a private undertaking that we would look next year at the possibility of capital underspending. I repeat that undertaking so that it will be on record. We must, of course, give the particular warning that we are here in the realm of speculation. We do not know whether there will be capital underspending next year. Certainly it looks very unlikely that there will be any this year, and although it has happened in the past I do not know whether it will happen next year. I shall be more than happy to look at the claim of Coventry as sympathetically as I can if such an underspending does take place in the course of the next financial year.
I should like, as the hon. Lady knows, to say "Yes" to phase 3, and indeed to the different phases in other hospitals, not only in Coventry, but in many other places in the country, but we have to face the fact that, as long as there be a limit on the amount of money we can allocate to hospital building, or indeed to anything else, we must have a careful system of priorities.
The hon. Lady asked me perfectly fairly whether I knew of any city which was in exactly the same position as Coventry, in relation, for example, to the load which has been put upon it,


the growing population of the area, and the needs of Coventry and the surrounding districts. Quite frankly, that is not the only test, though it is a test of great importance. We cannot only plan for a future on the basis of a comparison with the amount available in the past. There are many areas—and we can perhaps go into this by Question and answer if the hon. Lady wishes—in which, I do not doubt, the situation is much the same as in Coventry. What I have to look at is whether the hospital services in that area are or are not as good as they might be in the circumstances at the time, and it is true to say that, at Coventry, in spite of these deplorable conditions, which I hope to see removed very soon, really fine work is being done.
I should like to be able to give the hon. Lady a straight "Yes" to the question she asked me, but I am afraid I cannot do that without taking away money already allocated to other areas. I have told her what we will do, and that we will do with all good will towards Coventry. We will, assuming that there is no reduction in the money available, give this high priority in the financial year 1955–56, and if there should be any under-spending in the next year of capital investment, we will look with great sympathy into her claim. Beyond that I cannot go.

Question put, and agreed to.

Adjourned accordingly at Twenty-seven Minutes to Five o'Clock.